A new and wildly unusual COVID-19 lockdown strategy proposal for slowly reopening the economy has many investors and financial analysts scratching their heads, and it could impact Bitcoin‘s recent bullish momentum.
Bitcoin And Other High-Risk Assets Like Stocks Remain Exposed to Another Collapse
Fear, uncertainty, and doubt. FUD is among the most commonly used terms in the crypto space, as those three powerful emotions have the potential to cause massive, panic-induced selloffs.
The fear of the novel coronavirus in early Q1 2020 and uncertainty over how it would impact the economy caused investors to doubt their investments and dumped holdings for cash in a catastrophic collapse and liquidity crisis.
The selloff was so strong, the day is now referred to as Black Thursday.
During the selloff, the stock market tumbled, Bitcoin crashed over 50%, and even safe haven assets like gold fell from highs. Later on, as things got worse, oil prices fell into the negative for the first time in recorded history.
Related Reading | Stimulus Checked: Here’s The ROI on a ,200 Investment in Top Crypto Assets
But once stimulus checks started arriving, and lockdown measures began flattening the curve, the stock market began surging and Bitcoin has been on a steady, sustained upward trend.
Markets May Tumble If Unusual Rolling Lockdown Plan Leads To Fear And Uncertainty
Today, however, Bitcoin price began to crash, potentially on the heels of the latest news that an unusual economic reopening strategy has been revealed that may cause further uncertainty.
As was seen on Black Thursday, when investors are uncertain, doubtful, or fearful, high risk assets are the first to get dumped.
Gains seen in the stock market could be erased, and Bitcoin and cryptocurrencies could see another powerful collapse. The global economy is on thin ice and even the slightest setback could cause another major market crash.
The plan suggests a cycle of 50-days worth of mitigation measures in full force, followed by 30 days of more lax measures.
Related Reading | US Treasury Issues Stimulus Debit Cards Because They Failed to Launch a Cryptocurrency
The strategy is said to reduce the reproductive rate of the virus.
While this could let the suppressed economy breathe and allow for a more sustainable solution to the abrupt change in everyday life, it could also cause such uncertainty that there’s no chance of an economic recovery at all.
And during the 30 days of the more lax policy, it could theoretically undo the previous 50 days of stricter measures only making matters worse.
The economy must reopen for things to get back to normal, but given the pandemic’s stronghold over the world, some sort of rolling lockdown may eventually be the new normal altogether. How this impacts Bitcoin is anyone’s guess, but the high risk asset could be in trouble as a result.
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Silicon Valley Startups’ Funding Troubles Poses Unique Threat to the Crypto Industry
A report from law firm Fenwick & West LLP reveals venture capitalists have tightened spending in light of the economic crisis, spelling trouble for crypto startups looking for investment money.
Not only that, but the findings of the report also show deflation in company valuations when compared to pre-pandemic times.
Indeed, in January this year, Silicon Valley funding rounds typically boosted company valuations by 117% on average. However, startups in this region saw that figure drop to just 46% in March.
A Decline in Confidence See Investment Spending Dry Up
In view of the deteriorating economic situation, it should come as no surprise that the number of Silicon Valley companies able to secure investor funding is on a downward slide. With that, crypto startups can expect tough times ahead.
The total number of startups that raised funding in January stood at 126 companies, which the report deems as an exceptionally large number. But come February time, this fell to 60, which is more than a half drop, but is still a comparable year-on-year figure.
The Trump administration first announced a lockdown in March. This was followed by an extension to at least the end of the following month. In line with expectation, this tanked the number of firms able to raise funding in the Silicon Valley area. For March, the figure stood at just 44 firms. In effect, reducing the pool of money for the crypto firms.
Source: twitter.com
Barry Kramer, Partner at Fenwick & West LLP, who co-authored the report, said:
“Companies just like shoring up the balance sheet, just like people are stocking up on toilet paper. It makes them feel better to have it in the attic.”
Undoubtedly, sufficient cash reserves could make all the difference in a company’s survival during these times of uncertainty. But with a tightening pool of available money, crypto firms could see themselves frozen out of essential funding.
Typically, crypto startups, indeed all startups, tend to lack revenue in the early stages of development. But as venture capitalists flip bearish on the economy, crypto industry innovation is under threat. And a lack of funding presents a real concern for crypto startups looking to make it through these times.
Nascent Crypto Startups Struggle to Attract Investors During Pandemic Times
What’s more, the problem is further compounded as a result of risk aversion in times of uncertainty. And with crypto startups falling into the category of high risk and novel, the appetite to invest money in them has all but dried up.
Although venture capitalist money has not evaporated completely, the report uncovered a trend towards favoring safer bets. Rather than risky crypto startups.
Indeed, Fenwick and West LLP found that a greater proportion of established companies, and later-stage startups, had managed to secure funding.
This would suggest that venture capitalists were looking to protect existing investments, as opposed to looking for the next big thing.
NewsBTC
Gold Tanks Hard: Is Store of Value Narrative at Threat Like Bitcoin?
Gold has joined the proverbial blood bath both traditional and crypto markets have faced over the last few days. The sudden drop is reminiscent of the volatility seen in Bitcoin markets, but we’re still waiting for the likes of Peter Schiff to dismiss the yellow metal’s “store of value” qualities.
The markets seem to be reacting to the worsening situation regarding the coronavirus. The increasing numbers of cases around the world appear to have investors well and truly spooked.
Gold Price Drops Suddenly, Can it Really be a Store of Value?
After spending much of 2020 growing in value, the price of gold has suddenly tanked hard. At the time of writing a single ounce of the yellow metal will set you back around ,580.
The precious metal traded for around ,640 per ounce yesterday. This represents a more than 3.6 percent dip in a matter of hours. Such moves might be common in crypto asset markets but for gold, the move represents the biggest one-day plummet in more than three years.
Gold has joined other markets in tanking. As reported in the New York Times, stock markets around the world are reeling from the uncertainty surrounding the coronavirus pandemic, as are Bitcoin and crypto markets.
After some even more spectacular gains over the opening six or so weeks of 2020, Bitcoin has been declining for the last days of February. The leading crypto asset traded above ,000 on the 20th, then above ,000 until the 25th.
The price has since tanked again to around ,650. With the sudden drops, many called into question the narrative that BTC functions well as a store of value. NewsBTC reported as such this week.
Naturally, the likes of Peter Schiff and other prominent Bitcoin naysayers rejoiced at the plummeting BTC price. With other assets already dropping, Schiff proudly tweeted that gold prices were holding up well yesterday:
Gold is living up to its reputation as a store of value, as a safe haven. Money continues to flock into gold as a result of what's happening. https://t.co/mWp2XABudB
— Peter Schiff (@PeterSchiff) February 27, 2020
Given today’s heavy drop in gold, it only seemed fair to many Bitcoiners to take the dropping price as an opportunity to return the favour to Schiff:
Is $GOLD a much safer store of value?
@PeterSchiff
– Think again!
– Buy #Bitcoin pic.twitter.com/wBgIWbb6O1
— CryptoBit (@bitcoin_whales) February 28, 2020
Someone check on @PeterSchiff …. His precious rocks are falling in value FAST!#MustNotBeASafeHavenAsset pic.twitter.com/VYl5DZ9jdc
— Pomp (@APompliano) February 28, 2020
Neither Bitcoin, Gold, or Anything Else is an Infallible Store of Value
Of course, it’s entirely ridiculous to write off gold as a store of value, even after a relatively major price dip. The precious metal still offers a level of scarcity currently impossible in fiat currency.
Nothing has changed about gold over the past 24-hours apart from investors’ opinions. Similarly, nothing has changed about Bitcoin since it started dropping either.
Realistically, it’s pretty foolish to think that any asset will either perpetually increase or stay at the same fiat dollar value. The term store of value really just means that the asset in question possesses qualities that make it better suited to retain value than a other assets.
National currencies are routinely subject to inflationary pressure at the whim of central bankers and gold is not. Gold represents a harder money, and, therefore, a better store of value than fiat.
Bitcoin, with its much more limited end supply, represents a better store of value on paper than gold. Its divisibility and programmability, as well as ease of storage and transportation, make it a much more fitting store of value for the twenty first century too.
Related Reading: While The Rest of the Market Tanks, One Cryptocurrency Is Above All-Time High
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With New Members Libra Still Isn’t a Threat to Bitcoin, Here’s Why
Recent new members to the Libra Association look set to contribute capital, potential user bases, and technical expertise to help the project win favour with regulators. Yet, contrary to what you might have heard, Libra really isn’t a threat to Bitcoin.
The Libra Association recently added the Canadian e-commerce platform Shopify and crypto startup Tagomi to the governance consortium overseeing its Libra stablecoin project.
Libra and Bitcoin, Not Even the Same Beast
The crypto asset industry faced a lot of scrutiny when Facebook first announced Libra last summer. Suddenly, it seemed every lawmaker and regulator in the land had something to say about Bitcoin and/or Facebook’s financial ambitions.
It stands to reason that regulatory interest will continue to increase with further development on the project. The new members, as reported by Tech Crunch and Forbes this week, are clear evidence that those behind the project are soldiering on, despite the objections of the powers that be.
Shopify spends a lot of time thinking about how to make commerce better in parts of the world where money and banking could be far better. That’s why we decided to become a member of the Libra Association. https://t.co/w8NWY874xr
— Tobi Lutke (@tobi) February 21, 2020
The Forbes piece describes Libra as the “biggest threat” to the leading digital asset. It states that the regulatory heat Libra may have brought to Bitcoin may put it jeopardy:
“How would governments allow bitcoin to exist if Facebook’s libra could not?”
This largely misses the point. There is no Mark Zuckerberg of Bitcoin. If there was a known individual or company behind Bitcoin, you can bet that Congress would have hauled them up already to give testimony for Bitcoin. It would have been long before its market capitalisation had swollen to hundreds of billions too.
Bitcoin is out in the wild already. Any action by authorities against it would not be preventative, as it currently is with Libra. Even if governments were to attempt to police its use with some hugely costly, coordinated global effort, with the Blockstream satellite orbiting the earth, they would fail to wipe it out.
Bitcoin is useful because it is completely removed from any previous system – be government or financial. Its absolute censorship resistance makes it a valuable hedge against, well, everything else. Backed by a basket of fiat currency, the same really cannot be said for Libra.
A Different Kind of Threat?
The “Libra as a threat” narrative is largely absent from the rest of the piece. Yet it does return right at the end, with a slightly different flavour.
This time, readers are told that the stablecoin may render Bitcoin obsolete:
“If libra… is able to achieve these ambitious goals even will find it far harder to convince others that the world needs bitcoin.”
Again, this completely misses the point of what both Bitcoin and Libra actually are (or will be). Libra is a fiat-backed stablecoin. It will, ultimately, need to please regulators for it to ever see the light of day.
With the very same regulators currently pressuring the very same companies behind Libra to add back doors into their products, it’s difficult to see how a system like Libra could be truly innovative or disruptive in the way that open systems, like Bitcoin and other crypto assets, can.
Related Reading: Amid Crypto Market Crash, Top Investor Calls Ignoring Bitcoin an ‘Idiotic Strategy’
Featured Image from Shutterstock.
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Crypto-Demanding Cybercriminals Ramp Up Ransomware Threat With Data Exposure
Cybercrime is growing at an exponential rate, and showing zero signs of slowing down or stopping in the near future. As technology advances, so do the tactics used by these criminals, especially surrounding crypto.
One particular group of hackers that has been wreaking havoc across the United States as of late, has escalated their ransomware attacks by threatening to expose critical and sensitive data related to businesses as a way to encourage payment of exorbitant ransoms.
Cybercriminals Escalate Attacks With Threats Of Data Leakage
Cryptocurrencies and cybercrime go hand in hand, it seems. The asset class is like catnip for cybercriminals, according to a Google security expert, due to the added layer of anonymity they provide.
Related Reading | Crypto and Bitcoin Ransom: A Rapidly Growing Trend
Criminals prefer to leverage cryptocurrency addresses in the form of Bitcoin, or for added privacy, Monero, in order to attempt to hide any trace of their identity.
Cryptocurrencies like Bitcoin are built on a distributed ledger technology called blockchain, which makes transactions made using the cryptocurrency easily traceable. However, the actual sender or recipient isn’t immediately apparent.
It’s caused Bitcoin and other crypto assets to become the ransom request of choice for online hackers attacking businesses and the like.
One particular group claiming responsibility for attacks using a ransomware strain called Maze, has begun threatening to leak sensitive data of the businesses they are attacking, forcing them to consider paying the expensive Bitcoin ransoms.
The hackers behind the attacks have also launched a public website, listing victims who haven’t yet paid and threatening to release the data if the ransom isn’t received.
Bitcoin and Crypto At Center of Ransomware Requests
Eight total companies are listed on the website, including North America’s largest wire and cable company, Southwire. The hackers behind the Maze ransomware are demanding a ransom of 850 Bitcoin, or roughly .7 million at today’s current prices.
The hackers responsible also claimed to be behind other attacks, including a ransomware attack on the City of Pensacola, Florida, and a security firm called Allied Universal.
The Maze ransomware was first discovered by Malwarebytes security researcher Jérôme Segura this past summer, and the impacted businesses and government entities join 948 others that were affected by ransomware attacks throughout this year.
Related Reading | United States Regulators Begin Crack Down on Crypto and Bitcoin Crime
The emergence of crypto-related crime has caused government regulators to take a closer look at the asset class, and has earned them a negative stigma as a result. However, cryptocurrencies are just a vehicle for the criminals to exploit, not a tool for crime themselves. But because they do provide a thin layer of anonymity, their use for illicit purposes is unlikely to diminish anytime soon.
The post Crypto-Demanding Cybercriminals Ramp Up Ransomware Threat With Data Exposure appeared first on NewsBTC.
Grins Mimblewimble Privacy Model Under Threat After Alleged Break-In
n Despite Grins backers claiming that the newly discovered flaws were already well documented, the platforms overall reputation seems to have taken a severe beatingn
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Mnuchins Number Two Says Private Cryptos Pose Threat to Government Power and Will Be Watched
The deputy secretary of the U.S. Treasury has raised the specter of a not-so-distant future when private digital currencies have stripped some of the power from governments. Policymakers will take a hard look at that, he said.
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Blockchain Must Solve These 3 Issues to Avoid Quantum Threat Expert
n Blockchain should immediately address 3 issues to not be overtaken by quantum computers, head of Cryptography at IoTeX saysn
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Tencent Admits Facebooks Libra Is a Threat to WeChat Pay
n Tencent admits that Libra is a threat to the expansion of its payments servicesn
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Germany Fingers Anonymous Cryptos as Bigger Threat than Bitcoin
The German finance ministry has stated that criminal use of Monero (XMR) and Zcash (ZEC) is rising. In a recent report, it argued that use of anonymous crypto assets might one day replace that of Bitcoin on the dark web.
The report is careful to highlight differences between different crypto assets. Whereas blockchain forensics firms can often link an individual to a Bitcoin wallet, anonymity-preserving protocols limit their efficacy.
Criminals Still Prefer Cash to Pseudonymous Crypto!
The money laundering and terrorist financing-focused report is titled the First National Risk Analysus. Germany’s Federal Ministry of Finance published it on October 11.
The ministry started to assess the existing and future risks that could contribute to the proliferation of such financial crimes in December 2017. Joining the ministry in its research are 35 other federal and state authorities.
The analysis identifies the use of crypto assets as a potential risk factor for the future. However, it makes a clear distinction between pseudo-anonymous cryptos, such as Bitcoin, and privacy-focused currencies, such as Monero and Zcash.
The German Ministry of Finance claims that the risk posed by anonymous cryptocurrencies is greater than that of the likes of Bitcoin. Their anonymous nature makes policing criminal acts associated with their use much tougher and, therefore, criminals may start to use them more frequently.
The ministry observed that although use on the dark web or as a method of financing terrorism remains low, popularity for the anonymous cryptos is growing.
The report also states that there is not much evidence of any cryptocurrency being used in connection with terrorist financing in Germany. However, the ministry claims to have identified its use in relation to occasional groups of religious extremists and the far-right.
It says that current cryptocurrency volatility limits its use as a means of payment. However, those behind the report identify stablecoins as being a potential option for fast international payments beteween criminal networks.
Interestingly, it also states that the ultimately traceable nature of most crypto assets that have not had anonymity features built in makes them a poor choice when compared to a much more established and familiar means of payment – cash:
“The use of cash, in contrast to the use of pseudonymous crypto assets, leaves no traceable footprint and is easy to handle, so it can be assumed that, for example, the transfer of funds in the field of terrorism financing alongside hawala and money transfer service providers currently continues mainly via cash couriers.”
Related Reading: Bitcoin Price Volatility Approaches as Bulls Try to Outclass Bears
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