Microstrategy’s executive chairman, Michael Saylor, sees bitcoin as “the strongest asset.” He believes that capital is going to keep flowing from other asset classes, such as gold and real estate, into bitcoin because the cryptocurrency is “technically superior to those asset classes.” He emphasized that bitcoin is an exit strategy and Microstrategy has no plan […]
Bitcoin News
These Crypto Asset Classes Could Be Future Market Drivers: Santiment
According to analytics firm Santiment, Artificial Intelligence (AI) and Real-World Assets (RWA) could be future drivers for the crypto market.
AI And RWA Crypto Tokens Have Seen High Interest Recently
As explained by Santiment in a new post on X, topics like AI and RWA have recently seen a surge in interest. The indicator of relevance here is the “Social Volume,” which keeps track of the amount of discussion related to any given topic or term occurring on social media platforms.
This metric makes this measurement by counting the number of unique posts/threads/messages that mention at least one topic in question. The indicator measures the number of posts rather than the number of mentions themselves because the latter can provide a skewed picture.
Consider a situation where many mentions are occurring on these platforms but are limited to only a few posts. Discussion around the topic is happening for sure. Still, the fact that only some users are engaging in it could imply that the average user may not have any interest in the topic.
A large number of posts being made around the topic, on the other hand, would imply discussion is happening across social media, and hence, there has to be some interest outside niche circles.
Now, here is a chart that shows the trend in the social volume of AI and RWA over the last few months:
As displayed in the above graph, the Social Volume for these two topics has been at notable levels recently, implying that the crowd has been paying attention to them. Based on this increased interest, Santiment believes these topics are “projecting to be future crypto market drivers.”
“In the ever-changing climate of trader interests over the years, such as DeFi, NFT‘s, memecoins, or staking, these more recent topics have been a major focus, and many related tokens have taken turns benefiting from market decouplings,” notes the analytics firm.
Santiment has also listed some cryptos that connect with these topics. For the AI side, there is The Graph (GRT), Fetch.ai (FET), SingularityNET (AGIX), Ocean Protocol (OCEAN), and Bittensor (TAO).
Meanwhile, for RWA, the analytics firm has pointed out cryptos like Avalanche (AVAX), Chainlink (LINK), Internet Computer (ICP), and Maker (MKR). Given the high interest backing both these topics, it’s possible these assets could be ones to keep an eye on in the future.
Avalanche Price
Avalanche has observed a strong surge during the past week as the asset’s price has shot up almost 30%. Following this surge, the crypto has cleared the level.
The chart below shows how AVAX has performed recently.
Bitcoin Smokes Other Asset Classes: BTC Up 105% Since Start of US-China Tariff Spat
Bitcoin (BTC) has been absolutely smoking other asset classes since it bottomed in December 2018. The cryptocurrency market’s strong outperformance of equities comes as a time whe n the geopolitical and macroeconomic climate is extremely tumultuous, boding well for Bitcoin’s status as a store of value.
Related Reading: Crypto Tidbits: Bitcoin Mining by Blockstream, Ripple Investment Plans, Binance US Unveils Altcoin Lineup
Bitcoin Booms in Trade War
Over the past few months, the U.S. and China have been duking it on the macroeconomic stage, threatening and imposing tariffs and other trade restrictions on each other.
This trade spat, which is likely one of the most important of its kind in written history, has had a dramatic effect on asset markets. When tariffs have been announced, assets of all sorts jump or spike. Normally, the stock market takes a tumble and alternative assets and safe-haven currencies, like gold and even Bitcoin, shoot higher.
In fact, according to recent research completed by Grayscale Investments, a subsidiary of crypto conglomerate Digital Currency Group, since the trade war commenced, Bitcoin has “generated a cumulative return of 104.8% between May 5th” and August 7th.
For those unaware, a 105% gain in a matter of some three months is astounding, especially by traditional investment standards, with most stock market investors being used to 12% annualized returns.
What’s even more impressive about Bitcoin’s surge to the upside is that during that same time period, the average other asset class (stocks, emerging markets, currencies, etc.) lost 0.5%, which is quite scary, especially considering the fact that global GDP and other economic data continues to rocket higher.
According to Grayscale, this bifurcation between Bitcoin and practically everything else is a sign that the cryptocurrency can be used to hedge against trade risk and broader liquidity risk.
Why BTC Works as a Hedge
As reported by NewsBTC previously on Grayscale’s previous report on the matter, they believe crypto can be utilized during bouts in which there is high “liquidity risk”, the “risk of a real decline in wealth resulting from an imbalance in the amount of money and credit relative to debt in a given economy.”
To back this point, Grayscale looks to three primary facets of Bitcoin’s existence: store of value, spending viability, and growth possibility.
Firstly, as the company has characteristics, BTC can act (and has acted) better as a store of value than gold. Unlike the metal, the crypto is mathematically scarce, capped at 21 million units; BTC is decentralized and verifiable through the Internet; BTC is portable and divisible through digital technologies, and is unconfiscatable.
Secondly, Grayscale purports that due to having similar properties to physical cash.
And lastly, the firm opines that the potential that blockchain technologies have to grow and create value will only stimulate demand further, which should mitigate most, if not all negative effects of any downturn in global markets.
Featured Image from Shutterstock
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“Rat Poison” Bitcoin Outperformed Most Traditional Asset Classes in 2019
The asset that legendary investor Warren Buffett once called a “rat poison” is looking like nectar in 2019.
Bitcoin, a global money system currency, surged up to 53 percent in a much-needed bullish recovery session. In comparison, Crude Oil recovered 33 percent, while the technology stocks rallied 24 percent. Recession-stuck US real estate market and S&P 500 also stopped behind bitcoin with an 18 percent rebound each. Meanwhile, global stocks, real estate, and natural resources gained between the range of 10-13 percent.
Gold, an asset class which resembles bitcoin’s underlying properties the most, had a depressive 2019 so far as it dropped 1 percent. The Agriculture sector, too, remained a lousy investment after posting 5 percent in YTD losses.
More Room to Recover
Bitcoin’s recovery followed a bearish 2018 in which the asset dropped more than 70 percent in market valuation. The story was the same but minimalized for other asset classes. Crude Oil, for instance, closed 2018 on a 24.8 percent loss. The S&P 500, at the same time, plunged 6.2 percent, while Gold erased 2.6 percent off its spot rate.
The recent rebound across all the major asset classes find its propeller in the Federal Reserves’ interest rate policy. The US President Donald Trump is putting incredible pressure on the central bank to lower the interest rates, which will make borrowing cheaper. The move is bullish for the market in the short-term since more affordable financing would lead to an increase in spending, which includes investments.
But the fact that bitcoin is attracting more fiat money than its peers in the traditional market signifies its emerging “safe haven” status. Financial stability issues have not left the US market despite assurances from the White House. On the contrary, the Federal Reserve has shown concerns about the rise in business debts and leveraged corporate lendings, which could seriously leave small companies in damp if the economy improves.
Then, there are trade and tariff tensions between the US and China, along with slow economic growth globally, “Brexit,” and skepticism around Fed policy that could push investors towards more promising assets such as bitcoin. The ongoing broader recovery serves as a reminder that bitcoin could balloon faster than traditional asset classes. There is, indeed, more room to recover for this politically-independent financial instrument.
Bitcoin Long Data
The US Commodity Futures Trading Commission (CFTC) stated in its April 2019 report that institutional investors increased their long positions in the bitcoin futures contracts. The report revealed an 88 percent surge in the bitcoin’s bullish scenario, signaling a shift in the overall market sentiment. At the same time, short positions dropped by 63 percent.
According to Mike Novogratz, the chief executive officer of the US-based Galaxy Digital, institutional investors’ long sentiment on the bitcoin was a signal that the asset was heading into a bullish 2019. And so it happened.
“I don’t see us breaking ,000 by the end of the year but I think [in] Q1/Q2 if the institutions start coming in, we’ll put in new highs,” Novogratz said.
Not exactly a rat poison!
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CFTC Chair says Bitcoin Has Elements of all Asset Classes
Bitcoin is part currency, part security, and part digital coin according to the head of the Commodity Futures Trading Commision (CFTC).
CFTC Chair Struggles to Define Bitcoin
As the ecosystem around Bitcoin and cryptocurrency continues to evolve the various regulatory bodies in the US still struggle to define what it is so to create a framework in which it can be controlled.
Today the Chairman of the CFTC, J. Christopher Giancarlo, went on CNBC’s Fast Money and announced that Bitcoin is a little bit of everything. Speaking to host Melissa Lee the Chairman said “Bitcoin and a lot of its other virtual currency counterparts really have elements of all of the different asset classes, whether they’re meeting payment, whether it’s a long-term asset,”
Conceding that cryptocurrency is hard to define by the criteria that the various financial regulatory bodies in the US use, Giancarlo went on to explain that most of the asset definitions they use were established during the reform period of the 1930’s which makes it very difficult to apply to a currency based on technology which is only about ten years old.
The Chairman may have been referring to the Howey Test of 1946 that the SEC has been suggesting cryptocurrency exchanges refer to in order to self-determine whether they are involved in trading securities or not.
When asked to define what aspect of Bitcoin would apply to the CFTC Giancarlo said that;
“We see elements of commodity in it that are subject to our regulations, but depending on which regulatory regime you’re looking at, it has different aspects of all of that,“
before making a specific comparison between gold and Bitcoin which he then confused by saying “Only it’s virtual – It’s digital.”
Where he did point out some regulatory progress has been made is in the licensing of Bitcoin futures contracts traded on the CME and CBoE which he said are working quiet well.
He talked about Bitcoin being more suitable as a long term store of wealth then an ideal form of payment without mentioning other cryptocurrencies like Bitcoin Cash that were created specifically as easier to use forms of payment.
Regulation Wont be Resolved Anytime Soon
As indecisiveness as the interview was on the definition and future regulatory status of Bitcoin, the Chairman did say that in his mind Bitcoin and the underlying blockchain technology came hand in hand. That to fight against one while accepting the other would stymie the technological evolution of the ecosystem.
Before he finished the chairman said that regulating Bitcoin is going to be complicated and that he didn’t see the matter being resolved anytime soon, adding “At the end of the day, it’s for Congress, and not regulators, to decide whether new policies should be evolved for these new asset classes,”
Image from Shutterstock
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Crypto Craze Prompts Brisbane College to Provide Investment Classes
A Brisbane College has decided to provide students with an investment class tailored to the ever-expanding cryptocurrency space. This has been prompted by a surge in interest in the new asset class from its student population. According to ABC Australia, the decision was made after a spate of senior students started buying up various cryptocurrencies. Following this, an email was sent from St Laurence’s College to the parents of their pupils. It advised that the students at the all-boys college should be educated about the space they were getting involved in. The message read:
“While St Laurence’s College has no official stance on this subject it is felt that the boys should be cautioned and educated about these purchases.”
It went on to state that a teacher from the college would host the class. It would be provided for Year 11 and 12 students on a non-compulsory basis. Interested parents were also invited to attend the session. The class was scheduled to be held on February 2. However, ABC report that it has been postponed to a later date.
The decision to provide students with a solid basis of understanding about the world of cryptocurrencies was applauded by a professor of business and accounting at the Queensland University of Technology. Dr Chrisann Lee told ABC that despite their familiarity with computer technology, many of the “Net Generation” still required more information and education about making solid investments. She feels that high schoolers and young adults would benefit greatly from sessions like the one proposed by St Lawrence’s. Speaking with the publication, Dr Lee stated:
“While they are quite strong on basic financial literacy skills such as budgeting and interest concepts they may be struggling with more advanced topics like investment… Especially telling them the underlying asset that they are buying into, the technology that supports, the security and those kinds of things… they need to be fully aware to make informed decisions.”
On paper, such efforts from educational institutions to help their students understand the rapidly evolving digital finance world sound highly progressive and ultimately positive. However, without knowing the content of the class, it’s impossible to gauge whether they will be effective bases for expanding knowledge or will proliferate greater fear and uncertainty because of poor information being distributed. Thus is the problem with centralised anything, be it education, government, or the topic of the classes themselves – currency.
Image: PixaBay
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