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<p class="MsoNormal">Since Bitcoin's
beginnings in 2009, cryptocurrencies have gone a long way. While Bitcoin and
other cryptocurrencies such as Ethereum and Litecoin have grown in popularity,
they remain highly volatile and unsuitable for daily transactions. Stablecoins
come into play here. </p><p class="MsoNormal">Stablecoins are
cryptocurrencies that are meant to keep their value stable and provide
stability for routine transactions. We will look at the evolution of
stablecoins, from Tether to Central Bank Digital Currencies, in this article.
(CBDCs).</p><p class="MsoNormal">Tether Is
the World's First Stablecoin</p><p class="MsoNormal">Tether (USDT)
was the first stablecoin to gain traction in the cryptocurrency market. Tether,
which was launched in 2014, is a stablecoin that is tied to the US dollar, with
one USDT equaling one US dollar. Tether is intended to provide stability for
cryptocurrency traders and investors, who can use it to hedge against market
volatility. Tether has grown to become one of the most popular
cryptocurrencies, with a market worth of more than $60 billion as of March 2023.</p><p class="MsoNormal">Alternative
stablecoins have emerged after the debut of Tether, including USDC, DAI, and
TrueUSD. These stablecoins are intended to give the same level of stability as
Tether, but through various techniques. USDC, for example, is supported by a
group of firms, including Coinbase and Circle, and is routinely audited to
ensure that it is entirely backed by US dollars. DAI, on the other hand, is a
decentralized stablecoin backed by other cryptocurrencies like Ethereum.</p><p class="MsoNormal">Digital
Currencies Issued by Central Banks (CBDCs)</p><p class="MsoNormal">Stablecoins
have grown in popularity among cryptocurrency enthusiasts, although they are
not commonly accepted in the mainstream market. Central Bank Digital Currencies
(CBDCs) come into play here. CBDCs are digital counterparts to fiat currencies
issued by central banks. CBDCs, unlike cryptocurrencies, are backed by the
government's complete confidence and credit, giving them a higher level of
trust and stability.</p><p class="MsoNormal">CBDCs are still
in their infancy, but some central banks, including the People's Bank of China
and the European Central Bank, have begun to investigate the concept. CBDCs
have the ability to change the way we use money by providing various advantages
over existing fiat currencies and cryptocurrencies.</p><p class="MsoNormal">CBDCs Have
Many Advantages</p><p class="MsoNormal">CBDCs can
provide a more efficient and secure payment method, which is one of their
primary advantages. CBDCs can be transferred and received quickly, eliminating
the need for third-party middlemen such as banks or payment processors. This
can lower transaction costs while increasing payment speed and efficiency.
CBDCs can also provide a more secure payment system because they are backed by
the government's complete faith and credit.</p><p class="MsoNormal">CBDCs can also
help to make the financial system more inclusive. Traditional financial systems
can be exclusionary, with many individuals lacking access to fundamental
financial services, particularly in developing nations. </p><p class="MsoNormal">CBDCs can be
accessed via a smartphone, which is becoming more popular in developing
countries. As a result, CBDCs may offer a new opportunity for people to gain
access to financial services and participate in the global economy.</p><p class="MsoNormal">CBDCs'
Challenges</p><p class="MsoNormal">While CBDCs
have numerous potential benefits, there are several obstacles that must be
addressed. The possible impact on traditional financial institutions, such as
banks, is one of the key worries. </p><p class="MsoNormal">CBDCs, which
give an alternate method of keeping and transferring money, have the potential
to undermine the traditional banking system. This could result in employment
losses and lower profits for traditional banking firms.</p><p class="MsoNormal">Another issue
is the possibility of CBDCs being used for illegal purposes such as money
laundering or terrorism financing. Because of the anonymity and decentralized
nature of cryptocurrencies, it is impossible to track the flow of funds, which
criminals may abuse.</p><p class="MsoNormal">To address
these concerns, numerous central banks are investigating methods of
implementing CBDCs that ensure transparency and traceability. Some CBDCs, for
example, may demand customers to go through Know Your Customer (KYC) checks,
which can aid in the prevention of money laundering and other illegal activity.
</p><p class="MsoNormal">Furthermore, certain
CBDCs may be structured with a tiered access scheme, in which users must supply
specific information in order to access different tiers of the system.</p><p class="MsoNormal">Another issue
to consider is the potential impact on privacy. CBDCs may capture and keep vast
quantities of personal data while providing a more secure and efficient payment
method. This has sparked concerns about the possibility of government
surveillance and infiltration into individuals' financial lives. </p><p class="MsoNormal">To address
these concerns, some central banks are investigating the use of decentralized
systems like as blockchain, which can allow anonymity while maintaining
transparency and traceability.</p><p class="MsoNormal">Stablecoins
and CBDCs in the Future</p><p class="MsoNormal">Stablecoins and
CBDCs are significant advancements in the way we use money. Stablecoins have
grown in popularity among cryptocurrency enthusiasts, although they are not
commonly accepted in the mainstream market. </p><p class="MsoNormal">CBDCs have the
potential to change this by combining the benefits of cryptocurrencies with the
stability and trust of traditional fiat currencies.</p><p class="MsoNormal">CBDC
development is still in its early phases, and it may be several years before
they are generally accepted. CBDCs, on the other hand, have enormous potential
benefits, and many central banks are looking into ways to implement them. </p><p class="MsoNormal">CBDCs, as they
become more common, have the potential to alter the way we use money and
deliver a more equitable, efficient, and safe financial system.</p><p class="MsoNormal">Is a digital
divide inevitable?</p><p class="MsoNormal">Central Bank
Digital Currencies (CBDCs) <a href="https://www.financemagnates.com/cryptocurrency/coins/stablecoins-and-monetary-policy-implications-for-central-banks-and-regulators/" target="_blank" rel="follow">have been gaining momentum </a>as many countries are
exploring the possibility of issuing their own digital currencies. While CBDCs
could bring many benefits, such as increased financial inclusion and
efficiency, there is a real risk that they could also widen the digital divide.</p><p class="MsoNormal">The digital
divide refers to the gap between those who have access to digital technologies,
such as the internet and smartphones, and those who do not. This gap can be
seen in both developed and developing countries, with many individuals lacking
access to the digital tools necessary to participate in the modern economy.</p><p class="MsoNormal">CBDCs could
widen the digital divide in several ways</p><p class="MsoNormal">CBDCs require
individuals to have access to digital infrastructure, such as smartphones and
internet connectivity, to access and use them. Individuals who do not have
access to these technologies will be excluded from the benefits of CBDCs,
including faster and more efficient transactions.</p><p class="MsoNormal">Moreover, CBDCs
could exacerbate existing inequalities in financial access. While CBDCs could
increase financial inclusion for those who are unbanked or underbanked, they
could also deepen the divide between those who have access to traditional
banking services and those who do not. In some cases, CBDCs could even replace
traditional banking services, further marginalizing those who are already
financially excluded.</p><p class="MsoNormal">Third, CBDCs
could increase the risk of digital fraud and cybercrime. With the rise of
digital currencies, cybercriminals have increasingly targeted individuals and
businesses with phishing attacks, malware, and other scams. The introduction of
CBDCs could create new opportunities for these criminals, further widening the
digital divide and putting vulnerable individuals at risk.</p><p class="MsoNormal">To mitigate the
risk of widening the digital divide, it is essential that CBDCs are designed
with inclusivity in mind. Governments and central banks must work to ensure
that digital infrastructure, such as internet connectivity, is accessible to
all, regardless of income or location. Additionally, CBDCs must be designed
with strong security measures to prevent fraud and protect vulnerable
individuals.</p><p class="MsoNormal">Conclusion</p><p class="MsoNormal">These and
stablecoins are the next phase in the growth of digital currencies. Stablecoins
have grown in popularity among cryptocurrency enthusiasts, although they are
not commonly accepted in the mainstream market. CBDCs have the potential to
change this by combining the benefits of cryptocurrencies with the stability
and trust of traditional fiat currencies.</p><p class="MsoNormal">CBDCs have the
potential to transform the way we use money by creating a more efficient, safe,
and inclusive financial system. However, issues such as the possible influence
on established financial institutions and privacy concerns must be addressed. </p><p class="MsoNormal">As CBDCs
evolve, it will be critical to solve these problems in order for them to
deliver on their promise of a stronger financial system.</p>
This article was written by Finance Magnates Staff at www.financemagnates.com.
Read full article on FINANCEMAGNETS
Sam Bankman-Fried (SBF), the former CEO of FTX, now faces a 13-count indictment as U.S. officials have added new charges. One of the new charges alleges that SBF leveraged $40 million to influence “one or more Chinese government officials.”
Details of the Bribery Charges Against Sam Bankman-Fried
Sam Bankman-Fried (SBF), the co-founder and former CEO of FTX, now faces charges of bribing Chinese government officials. “Bankman-Fried and others agreed to pay cryptocurrency to one or more foreign officials in China to influence and induce them to unfreeze the accounts in order to assist Bankman-Fried, Alameda, and others in obtaining and retaining business for, and directing business to, Bankman-Fried, Alameda, and others,” the revised indictment states.
This is not the first time SBF’s indictment has been revised. In February 2023, Bitcoin.com News reported that SBF’s indictment was revised to include bank fraud charges. SBF faces other charges as well, including defrauding the Federal Election Commission (FEC), wire fraud, and securities fraud. The former FTX CEO has pleaded not guilty to the charges, but three of the firm’s top deputies have pleaded guilty and are cooperating with federal prosecutors.
The revised filing indicates that Chinese officials reportedly seized two accounts owned by Alameda Research, SBF’s quantitative trading arm, which were allegedly held on “two of China’s largest crypto exchanges” in 2021. Once again, the revised indictment does not include any other defendants, and Sam Bankman-Fried is the only individual named.
With the addition of bank fraud charges last month and newly added bribery charges, SBF now faces a total of 13 charges from the Department of Justice in New York. He also faces lawsuits filed by the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC).
What do you think about the new charges SBF faces? Let us know your thoughts in the comments section below.
Read full article on BITCOIN.COM
Bitcoin price fell from $28K to $26.5K after the US CFTC sued crypto exchange Binance and its CEO Changpeng “CZ” Zhao for violating U.S. crypto trading and derivatives regulations. The crypto market considers this move as a continued regulatory crackdown against crypto.
With the crypto market already facing liquidity issues, action against Binance will further worsen the liquidity problem as it’s the world’s largest crypto exchange. According to data, Bitcoin trading on Binance accounts for over 80% after the collapse of FTX and Operation Choke Point 2.0.
Bitcoin Miner to Exchange Flow. Source: CryptoQuant
Miners have started selling their Bitcoin holdings. Bitcoin Miner to Exchange Flow metric indicates miners have transferred almost 1700 BTC to crypto exchanges on Tuesday. It increases selling pressure on Bitcoin from miners. This is the second-largest selloff by miners YTD after over 3K BTC selloff on January 19.
Moreover, Bitcoin Miner Reserve metric shows miners’ BTC holdings also decreased. It confirms miners have started selling their Bitcoin holdings and it will trigger Bitcoin price downfall. It is important to monitor the situation daily.
Bitcoin Miner to Exchange Flow for Binance Pool data reveals that 1646 BTC transferred from the Binance mining pool to Binance exchange.
Bitcoin Miner to Exchange Flow for Binance Pool. Source: CryptoQuant
Bitcoin Price Fall To $25,000 Likely
Bitcoin price is currently trading at $26,951. The 24-hour low and high are $26,606 and $27,304, respectively. Thus, the BTC price is down nearly 3% in the past 24 hours. Trader sentiment remains relatively neutral, with Binance being sued and other recent uncertainties not affecting their expectations.
Bitcoin Price in Daily Timeframe. Source: Rekt Capital
As per popular analyst Rekt Capital, BTC close below $27,000 in the daily timeframe would be enough to trigger the breakdown process. Bitcoin is currently holding above the $26.5K level. However, uncertainties and monthly close risk Bitcoin price to reclaim the 200-weekly moving average (WMA)
Also Read: After CFTC, SEC Could Sue Binance Over Securities Offerings
The post Miners Dumping Bitcoin To Crypto Exchanges, BTC Price Reversal Below $25K Likely appeared first on CoinGape.
Read full article on COINGAPE
It is never easy to make predictions about future movements in the price of Bitcoin, but there is some data that bodes well.
These are not enough data to say that the price of Bitcoin is likely to rise, but if nothing else they reveal a scenario in which an eventual rise would be possible.
While we cannot precisely quantify what the real likelihood is that Bitcoin’s price could continue the climb that began in January, at this time such a scenario appears to be at least plausible.
Current scenario and future scenarios: predictions for Bitcoin’s price
Market value is simply the price at which trades, i.e., purchases and sales, take place.
This price depends primarily on the relationship between supply and demand. When there is balance between these two forces, prices tend to remain relatively stable, that is, to lateralize. But if the relationship becomes unbalanced toward demand, or toward supply, the price tends to move.
In particular for it to move upward it is necessary for the equilibrium to shift in favor of demand, and this can happen either by an increase in demand itself, or by a reduction in supply, or both.
Right now supply seems to be relatively stable. So in the event that there is a significant increase in demand, the price could go up if supply continues to remain stable.
According to the latest Bitfinex Alpha report, number 47, comparing the supply held by long-term holders (LTH) with the supply held by those who were last active a year ago or more, it can be seen that the former is decreasing while the latter is steadily increasing.
This reveals that long-term holders are currently selling, while those who bought during the bull run are buying.
The interpretation of this phenomenon given by Bitfinex analysts is that this is a positive phenomenon for the crypto market as it fuels demand from new entrants. This is coupled with a relatively stable and limited supply, indicating that if there is an increase in buying, the price may actually go up.
Moreover, Bitcoin‘s weekly spot trading volumes spiked last week, amounting to the highest level since mid-2021. So, in the event of an imbalance toward demand, there would also be the volumes at this time to be able to imagine a significant increase in price as a consequence.
While it is not possible to predict whether or not an increase in demand is upon us, these data clearly indicate that such a scenario is far from impossible.
In fact, recent entrants to the crypto market, particularly those who entered during the last bull run, appear to be continuing to buy and hold, making it possible to imagine an eventual increase in demand.
The comments of Bitfinex analysts
Bitfinex analysts commented on the report’s findings, adding that the derivatives market last week saw Bitcoin futures trading volume approach $1 trillion on several exchanges, with open interest in Bitcoin options rising to $12.14 billion.
“This suggests that institutional investors are increasingly participating in the market. – indicating that we may be in the early stages of a bull market. Even though this activity might sound enticing to investors, it is generally followed by increasing volatility.”
Hence they are warning investors and speculators that although in theory this period could be the first phase of a bullish market, it could also be characterized by increased volatility.
Therefore, it may not trivially be a period of rising prices, but a period of fast and significant price movements that could eventually end with a de facto rise.
In addition, they point out how the BTC Long-Term Holder (LTH) Spent Output Profit Ratio (SOPR) is returning to a level above one over multiple time intervals, indicating that trades are being made at a profit.
“The behaviour of long-term Bitcoin holders selling their coins during current market conditions is consistent with previous bear market trends, which is a positive signal for the market.”
These are merely signals, which in theory could also be denied at any moment.
However, the overall environment at this time seems positive, as also indicated by the Fear & Greed Index, which remained in sharply positive territory even after yesterday’s decline due to the bad news regarding Binance.
Therefore, it seems that there would be conditions for a possible increase in the price of Bitcoin, as long as the demand for BTC in the market increases. For now, such an increase has not occurred, and nothing assures that it will.
Read full article on THE CRYPTONOMIST
<p class="MsoNormal">By David Kindley, Market Strategist at <a href="https://www.orbex.com/" target="_blank" rel="follow">Orbex</a> </p><p class="MsoNormal">Fears of a global banking crisis are making headlines these days, after the collapse of three US banks and Credit Suisse’s takeover by UBS. The level of economic uncertainty is now as high as it has been since the depths of the pandemic, with many fearing a repeat of the 2008 Global Financial Crisis – which incidentally was also brought about by the collapse of overleveraged financial services firms and banking companies. </p><p class="MsoNormal">But before we explore whether these fears are justified, we need to consider the events that led us here.</p><p>A historic inflation surge</p><p class="MsoNormal">When Covid-19 hit and global lockdowns came into effect, Central Banks started printing money, lowering key interest rates, and issuing stimulus checks to help keep the economy afloat. In this ultra-loose cheap money environment, digitalization and innovation took center stage with retail investors, hedge fund managers, tech companies, and even banks taking on cheap loans and overleveraged positions to help boost their profit margins. </p><p class="MsoNormal">As the economies reopened and as a result of all the disruptions in supply chains and the ongoing conflict in Russia-Ukraine, prices for basic goods and services skyrocketed. </p><p class="MsoNormal">The ultra-loose monetary policy of 2020-2021 drove inflation to a 40-year high of 9% in the US, ultimately forcing the Federal Reserve to rush into its fastest hiking cycle in modern history and setting off a process of “deleveraging” the economy. </p><p>The price of risk</p><p class="MsoNormal">As Warren Buffett once said: “Only when the tide goes out do you learn who has been swimming naked.” Unsurprisingly, the first companies that defaulted on their loans or were forced to file for bankruptcy because they did not have enough capital on hand to cover customer withdrawals were investment companies and crypto exchanges that had re-invested their client funds and could not liquidate their positions as stock, crypto, and long-maturity bond prices plummeted. </p><p class="MsoNormal">When the Silicon Valley Bank collapsed on March 10 however, the world was alarmed, Signature Bank soon followed leaving crypto companies unbanked, and by the end of the same month, Credit Suisse was taken over by UBS. </p><p class="MsoNormal">Meanwhile, SVB-buyer First Republic and Germany's largest lender Deutsche Bank came under immense sell pressure and their stocks slumped amid fears over the banking sector's resilience. We also saw some bank runs in medium-sized banks with depositors trying to get their money in cash or transfer their money to bigger banks. But why exactly did this all happen?</p><p>A balance sheet recession</p><p class="MsoNormal">Much like tech and investment companies, banks invested a large proportion of their deposits in held-to-maturity securities or bonds. This led to their collapse when investors sought to withdraw their money at the same time. Combined with the drop in stock prices, analysts fear that this may lead to a “balance sheet recession.”</p><p class="MsoNormal">In a balance sheet recession, sectors of the economy stuck with bad assets from a collapsed bubble are forced to sell, pay down, or otherwise dispose of those assets, in order to avoid bankruptcy. This in turn brings the net new borrowing grind to a halt. Given the latest banking crisis, there’s a good chance we will experience a similar deleveraging state. </p><p>How bad is it?</p><p class="MsoNormal">Recoveries from balance sheet recessions primarily involve debt paydown and are usually painstakingly slow. Back in 2008, the world underwent a global financial crisis after cheap credit and lax lending standards fueled a housing bubble. When the bubble burst, major investment banks were left holding trillions of dollars of worthless investments in subprime mortgages. The bankruptcy of financial services firm Lehman Brothers in September 2008 was the climax of this housing crisis.</p><p class="MsoNormal">While the economic conditions that led to the 2008 global crisis at first glance look very similar to what we are experiencing today, a repeat of the 2008 crash is not very likely. For one, today we have more regulation and oversight in place resulting in much less risk in the banking system than 15 years ago. </p><p class="MsoNormal">There are also investor compensation funds in place to guarantee all deposits up to 100K in the EU and up to 250K in the United States. In the case of the SVB collapse, the Federal Deposit Insurance Corporation (FDIC) stepped in on March 13th, 2023, to guarantee that all depositors of the institution, regardless of account size, would be made whole. </p><p>The Fed remains hawkish</p><p class="MsoNormal">On Wednesday, March 22nd, 2023, the US Federal Reserve raised interest rates by 0.25%, reiterating the need for tighter credit conditions for households and businesses in order to bring inflation under control. </p><p class="MsoNormal">Not only did Fed chair Jerome Powell firmly dismiss market bets for a rate cut in 2023, but he also hinted at another 0.25% increase within Q2. At the same time, Capital Economics pointed out that deposits across all the banks have fallen by $663 billion in the past year as customers search for higher yield. </p><p>A fragile recovery</p><p class="MsoNormal">As smaller banks collapse, major banks are bound to become even more conservative in their lending.What it all comes down to is that less lending will lead to less spending and, by extension, less economic growth. Even if market volatility subsides in the coming weeks and months, less credit flowing into the economy means lower growth. </p><p class="MsoNormal">In fact, US and EU growth is projected to remain at below-trend rates in 2023 and 2024. At the same time, inflation is projected to trend lower in the next two years and if the Russia-Ukraine conflict ends, energy and food prices will eventually drop. When that happens, the Fed and other Central Banks are bound to start quantitative easing and we will see rates drop and lending ease, which will in turn mark the end of the current economic contraction cycle.</p><p class="MsoNormal">About the Author: </p><p class="MsoNormal">David Kindley, Market Strategist at <a href="https://www.orbex.com/" target="_blank" rel="follow">Orbex</a> </p><p class="MsoNormal">Market Strategist at <a href="https://www.orbex.com/" target="_blank" rel="follow">Orbex</a> David Kindley is a renowned fundamental analyst with over 10 years of trading experience in the financial markets. With a keen eye for macroeconomics and a special focus on trading psychology, David is passionate about helping everyday investors make informed trading decisions through his thorough research and analysis. </p>
This article was written by Finance Magnates Staff at www.financemagnates.com.
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The CEO of investment management firm Vaneck has predicted a bull cycle for gold and bitcoin. “We are at the very beginnings of what could be a several-year cycle in gold, and I also put bitcoin in that category as well,” the executive said, adding that the Federal Reserve is “close to the end of their tightening.”
Bull Cycle for Gold and Bitcoin
Jan van Eck, CEO of investment management firm Vaneck, shared his prediction regarding gold and bitcoin in an interview with CNBC last week. His firm has $69 billion in assets under management.
When asked whether gold, at its present levels, should be viewed as an investment or a temporary trade that may yield additional profits, he replied:
We are at the very beginnings of what could be a several-year cycle in gold, and I also put bitcoin in that category as well.
“Finally, as a gold investor, you’ve been rewarded over the last couple of weeks. Weakness in the banking system and gold rallied. That’s why you own gold,” the executive continued.
The Vaneck CEO further explained that “it could be a two-year cycle” because he believes that “the Fed is close to the end of their tightening.” The executive added: “The market is worried now about the consequences and it could take a year or more for those consequences to roll through the commercial real estate market, the banking and lending dynamics, [and] maybe we have a shallow recession.” He elaborated:
At some point, the Fed is going to start easing, and that’s when gold is really going to party.
Discussing gold and bitcoin, the Vaneck executive opined:
I think all the speculation is out of both of those markets.
Van Eck pointed out that bitcoin has surged nearly 70% this year, outperforming all other assets, and has rewarded “the people that own bitcoin for that thesis of wanting a hedge in their portfolio.”
Last month, Pantera Capital said that we’re already in the next bull market cycle for bitcoin. Last week, the Federal Reserve raised interest rates by 25 basis points. Some people expect the Fed to cut rates soon, including billionaire Jeffrey Gundlach. However, Fed Chair Jerome Powell stated that rate cuts are not in the Fed’s base case. Economist Peter Schiff said the Fed has already returned to quantitative easing whether they admit it or not.
Do you agree with Jan van Eck? Let us know in the comments section below.
Read full article on BITCOIN.COM
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