Blockchain Bites: XRP’s Rally, Chainalysis’ $ 1B Valuation, Bitcoin’s Volatility in Perspective

The US government is using Circle’s USDC to bypass Venezuelan blockades. Chainalaysis is looking to raise $ 100 million in fresh equity with a $ 1 billion valuation. Billions of dollars from institutional players are flowing into Coinbase. And VanEck found that bitcoin is less volatile than a quarter of the shares of the S&P500, reigniting the case for a bitcoin ETF.

Injection of “stability”
An unnamed US government agency has enlisted stablecoin provider Circle and dollar-backed P2P payments startup Airtm to support Venezuelan politician Juan Guaidó’s candidacy. The plan is to distribute relief funds to health workers and other local Venezuelans, bypassing restrictions set by Venezuelan President Nicolás Maduro, who was re-elected in the 2018 election, by converting the seized US funds into Circle’s USDC product and dispersed via AirTM Network’s cell phone. “This is, in a sense, a way to bypass the state-controlled banking system and distribute it directly to the people,” Circle’s Jeremy Allaire said, adding that this is probably the first goal. US foreign policy that uses a cryptographic stablecoin.

Private eyes
Chainalysis plans to raise $ 100 million in venture capital with a $ 1 billion valuation in a rapidly approaching Series C. Led by newcomer VC Addition with expected participation from Accel, Benchmark and Ribbit, the round could push the start of blockchain analysis to unicorn status (a rarity for cryptography). Several governments, banks, regulators, and cryptocurrency companies rely on Chainalysis technology, as seen in the company’s financial situation – the company increased its customer base by 65% ​​from Q3 2019 to Q3 2020. blockchain investigation news, analyst firm Coinfirm found that government agents often go behind “substantial” amounts of forked cryptocurrencies in seized wallets. Finally, CipherTrace has filed two patents related to monero transaction sniffing (XMR) to protect privacy.

Open banking activities
The U.S. office of the Comptroller of the Currency, a national banking regulator led by former Coinbase adviser Brian Books, has proposed a rule that would prohibit banks from blacklisting legal, but unsavory activities, potentially including crypto companies. Under the proposed rule, banks could deny financial services to clients only on the basis of “quantitative and risk-based standards set in advance”, not in response to political pressure. Cryptocurrency firms have long struggled to get or hold bank accounts in the United States, with only a handful of friendly providers, namely Silvergate Bank, Signature Bank, and Metropolitan Commercial Bank. The proposal is open to public comment until January 4th.

$ 20 billion BTC
Coinbase now holds $ 20 billion in institutional assets, says an exchange executive. Brett Tejpaul said institutional asset business was under $ 6 billion when he joined the company in April and grew $ 14 billion under his oversight. Notably, Tejpaul pointed to Coinbase’s acquisition of Tagomi in May as a boost. “It has fundamentally transformed our ability to satisfy institutional clients who want to use intelligent order routing and algorithmic execution,” he said. The veteran banker also said that adding JPMorgan Chase as a banking partner and Deloitte as an auditor has given Coinbase more credibility for compliance. The company is now measuring new incoming capital for billions of bitcoins, Tejpaul said.

Aren’t CBDCs crypto?
China Construction Bank (CCB), the second largest bank in the world, has suspended the imminent listing of a $ 3 billion bond issue that was to be tradable with bitcoin and US dollars. The bank was sponsoring the issuance of Longbond debt, intended to be traded via Fusang’s digital asset exchange. Now the program is being re-evaluated. In other news from China, the city of Suzhou will hold the country’s second central bank digital currency (CBDC) lottery next month (this time with additional features like smart touch payments). This follows Chinese President Xi Jinping’s comments to the G20 that CBDCs need to be adopted by developed nations.

Exploited buyers
According to a key metric, some BTC traders may have been in debt during the recent rally above $ 18,000. According to data source Glassnode, the average level of the “funding rate” on major exchanges has increased significantly from 0.023% to a five-month high of 0.087% in the past 48 hours. The funding rate reflects the cost of maintaining long positions, measured by the premium paid by derivatives over spot prices. A higher number indicates excessively bullish and therefore overbought conditions. In such situations, a pullback or consolidation can trigger a close out of long positions, leading to a deeper decline and increased price volatility.

XRP pumps
XRP, the native XRP registry asset, is riding the highs of 16 months. The third largest cryptocurrency by market cap rose to $ 0.437564 on Saturday, its highest price since July 2019, according to CoinDesk 20. It has continued to rise since then, with minor contractions. Now above the $ 0.50 level, XRP has appreciated more than 120% since the beginning of the year.

Volatility, market data and ETFs
A new analysis from VanEck, a leading investment management firm, found that bitcoin is less volatile than S&P’s benchmark stock index.

The report, released on November 20, compared BTC to companies listed on the S&P 500, finding that the cryptocurrency was less volatile than 22% of these shares over the past three months.

“Historically, bitcoin has been discussed in the news and among investors as a nascent and volatile asset outside of traditional equity and capital markets,” the report reads. VanEck attributed this volatility to the relatively small overall market size of bitcoin, regulatory blocs and limited participation by traditional wealth managers.

But bitcoin’s volatility is not an aberration, as over the 90-day period measured through November 13, around 112 stocks experienced equal or greater price volatility. Additionally, 29% of S&P shares have been more volatile than bitcoin in the past year.

As CoinDesk Research Director Noelle Acheson noted in a September newsletter, volatility is often and mistakenly confused with risk.

“Volatility is a metric, a number, a measure. Risk is an ambiguous concept, “he writes, adding that volatility can be an attractive attribute for a well-weighted portfolio.

In Acheson’s analysis, he found that bitcoin’s volatility is often correlated with the direction of the asset’s price: that is, when the price falls, volatility usually does.

In comparison, the CBOE Volatility Index (VIX), which measures the implied volatility of the S&P 500, tends to move inversely against the S&P 500. “The 60-day average correlation between the two for the month of August was -0, 84, a near-perfect negative association value. Using bitcoin’s realized 30-day volatility as a proxy for a bitcoin VIX, we get a 60-day average correlation for August of 0.45. A very different scenario, “he discovered.

Additionally, bitcoin’s volatility is more measurable than traditional markets, as crypto is traded 24/7 freely around the world. More data points mean more data to analyze.

It is for these reasons, bitcoin’s similar volatility and market information, that many feel comfortable shaking for a BTC exchange-traded fund. As reported, US regulators have been reluctant to accept crypto ETF products, often citing a lack of consistent market data.

But a sober look at real market conditions may indicate otherwise.

VanEck concludes its report by saying, “While no US bitcoin exchange-traded funds (ETFs) are available today, we believe such products may exhibit similar volatility characteristics – based on the comparison above – as many stocks in well-known indices and ETFs, such as the S&P 500 and related products “.