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Analysts warn of ‘institutional exhaustion’ with Bitcoin price back below $32K

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The price of Bitcoin (BTC) recovered in the past two days after dropping to as low as $28,850. Following the swift rebound, however, BTC has been unable to break past heavy resistance at $33,000 on Jan. 23, pulling back below $32,000 at the time of writing.

BTC/USD 1-hour price chart (Coinbase). Source: TradingView.com

Coinbase premium returning is bullish, but what now?

Earlier, when the price of Bitcoin started to drop below $32,000, BTC traded much lower on Coinbase than on Binance.

The lack of premium on Coinbase was worrying for two key reasons. First, Bitcoin naturally trades higher on Coinbase due to the minor premium of Tether.

Second, when Coinbase sees a lower price than other exchanges, it shows that there is high selling pressure in the U.S. market.

As the selling pressure on Bitcoin began to increase in the U.S. market, the price of BTC feel steeply in a short period.

BTC/USD (white) vs. Coinbase premium Index (blue). Source: CryptoQuant

But, almost immediately after BTC rebounded from $30,000, the Coinbase premium reappeared. At the time of writing, BTC is around $40 higher on Coinbase than on Binance.

The Coinbase premium re-emerging after nearly 12 hours is a positive sign of a potential trend reversal.

Signs of “institutional exhaustion”

But everyone is far from bullish in the near term, however. Analysts at QCP Capital, a team of traders in Asia, see several signs of “institutional exhaustion.”

Considering that the main narrative around the recent has been the institutional demand for Bitcoin coming from the U.S., the rally may be in danger if the institutional appetite for BTC slows down. They said:

“Signs of institutional exhaustion: We’ve done a timezone analysis which breaks down BTC moves into Asia hours vs. US hours (12 hours each). Since March last year, the clear pattern has been relentless US buying while Asian whales and miners have been on the offer.”

Bitcoin loses strength in U.S. period. Source: QCP Capital

The traders empahsized that the strength in the U.S. trading session lost momentum for the first time.

In fact, throughout the past week, most of the BTC selling pressure came from Asia. This marks a key shift in market sentiment. They added:

“However after the BTC top 2 weeks ago, the strength in US hours has lost momentum for the first time. This is a clear sign of exhaustion in demand from the US institutions and corporates who have been the primary drivers of this bull run.”

What comes next for Bitcoin?

Bitcoin is at risk of a corrective phase throughout the first quarter of 2021 if institutional demand for BTC subsides.

Various institution-focused platforms and vehicles, like Grayscale, are still seeing large inflows, which is indicative of solid institutional demand. At the same time, MicroStrategy continues its policy of buying Bitcoin on each dip with the latest purchase on Friday totaling $10 million. 

“Today, $31,000 was a pocket of strong support, so at least not everyone is selling,” said Chad Steinglass, head of trading at Crosstower, a digital assets capital markets firm.

“We’ll have to wait and see if that wall remains, or if institutions continue to accumulate. If they do, it’s likely that the trend will re-establish itself and continue. If they move to the sidelines waiting for more regulatory guidance, then their lack of buy flows will be acutely felt.”

At the same time, the likelihood of a wider correction remains if the U.S. market continues to see an overall decline in the appetite to accumulate BTC, particularly if the dollar continues to recover in 2021.

Analysts warn of \’institutional exhaustion\’ with Bitcoin price back below $32K

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Kyber plans to become a hub for DeFi with massive DEX upgrade

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Kyber Network (KNC), a decentralized exchange platform and aggregator on Ethereum, announced plans for Kyber 3.0, a complete overhaul of its platform.

With the 3.0 release, Kyber will transition to become a network of specialized liquidity pools, similar to how different exchanges optimize for different kinds of assets. For example, Kyber 3.0 will allow very high amplification factors for pairs between different wrappers of the same asset, similar to Curve. The team says this would allow a 100-fold improvement to slippage. Other, less stable pairs like Bitcoin (BTC) to Ether (ETH), would be able to benefit from a five-to-ten-fold improvement in capital efficiency.

The optimization is achieved by implementing dynamic market makers, or DMMs. This iteration on the original concept allows fine-tuned adjustments to the key parameters of a liquidity pool. Creators will be able to customize the pool’s relative weights of each asset — similar to Balancer — and set a custom amplification factor to reduce slippage.

Trading fees will be adjusted dynamically as well: During periods of high volume, fees will be increased, and conversely they will be decreased during lower volume periods. Such a mechanism helps mitigate some of the damage from impermanent loss, the phenomenon where a liquidity provider’s assets are constantly rebalanced to sell the winner and buy the loser. Since most of the impermanent loss occurs during decisive and likely high-volume moves to either side, a higher fee parameter helps capture some of the upside.

Another important improvement is gas optimization. Previous iterations of Kyber generally consumed much more block space and were thus more expensive to use. In a conversation with Cointelegraph, a spokesperson from the team explained that this was due to Kyber using a single access point for interacting with its many reserves and routing paths. The new version will allow higher flexibility, with users being able to take liquidity directly from the source they need, in addition to a general improvement to gas efficiency. The new architecture is also designed to support future cross-chain and layer-two scaling solutions.

These improvements are just a start, the spokesperson said. Future plans include more specialized liquidity pools for certain user niches. These include the Professional Liquidity Protocol, a specialized liquidity model for professional market makers, the Bridge Protocol for pulling liquidity from external sources and an upcoming derivatives trading platform.

The token economics of KNC will also be overhauled to bring it in line with other governance tokens:

“In the coming proposal, KyberDAO will have multiple sources of value accrual, including the new DMM and all new liquidity protocols. The governance utility of KNC will be greatly enhanced as well, given that they now have effective oversight of these various protocols. KyberDAO will also have the ability to vote in and fund new protocols for the network.”

The details of the change will be discussed and approved by the existing community, the spokesperson clarified. The KNC token will also have various value capture mechanisms, with holders being entitled to a portion of the fees generated by the protocol.

The upgrade will be rolled out in two phases, called Katana and Kaizen. The first will feature the DMM and a proposal for KNC overhaul and migration. Though no specific dates have been selected, the full transition is expected to be completed late in the third quarter of 2021.

Kyber plans to become a hub for DeFi with massive DEX upgrade

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Real Estate Investing Through Security Tokens

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Codezeros

Real estate being the largest global market in the world, is currently valued at approximately $200 trillion which is 33 times more than the global gold market. Small improvements in the real estate market can have tremendous economic value. It’s hard to find a segment that has not been influenced by Blockchain Technology and real estate couldn’t escape the blockchain disruption either.

In this article, we will look at how blockchain technology can be leveraged to invest in real estate through STO solutions.

Tokenization refers to the digitization of real-world assets. With the help of Blockchain in Real Estate, digital assets can be programmed to represent ownership rights, which can be sold as “security tokens”. Through the use of robust smart contracts and technology, security tokens create a standard trade between buyers and sellers.

The main difference between security and utility token is that security token holders are entitled to ownership rights and are considered as “securities” by most financial regulators whereas utility tokens function as coupons and give holders no right or stake in the asset.

Real estate being the largest global market in the world, is currently valued at approximately $200 trillion which is 33 times more than the global gold market. Small improvements in the real estate market can have tremendous economic value.

Let’s explore some possible improvements in-depth:

  1. Increased Liquidity In Real Estate

Blockchain technology in real estate adds liquidity in the intrinsically illiquid market. With Security Token Development, it is easy for the owners of expensive properties to quickly sell their assets without affecting the price. Miniscule investors can diversify their global real estate portfolio with a small ticket.

2. Reduced Intermediaries

With blockchain, the number of intermediaries is reduced almost to naught as most of the processes are automated and minimal human participation is required. This substantially eradicates the fees and charges paid to the intermediaries, which will ultimately result in significant cost and time savings.

3. Enables Fractional Ownership

Blockchain real estate development would lower the barriers to real estate investing by allowing fractional ownership. Typically, investors would require a significant amount of money upfront to acquire property but tokenizing ownership enables “fractional shares” which lowers the capital requirement. Hence, it would be possible to hold half or even 10% or 20% of the land.

4. Diversifies Real Estate Portfolio

Diversifying investments minimizes the risk. Real estate investing through blockchain enables the ability to diversify the investments not only by region but also by allowing the investors to spread their money in different categories of real estate; be it residential, multifamily, commercial, or cash flow properties. By tokenizing ownership of a real estate, investors do not necessarily have to own 100% of a single property but they can own 10% of a property in 10 different cities around the globe.

5. Irrefutable Proof Of Real Estate Ownership

The digital history of transactions held in the blockchain ledger enables the investors and stakeholders to prove their ownership beyond any doubt. This technology leaves no room for fraud attempts. It shows the exact history of ownership and makes it impossible to falsify transactions or con the investors.

In the next part, we look at some of the ongoing projects who used Blockchain real estate development by converting them into security tokens.

Polymath

Polymath makes it easy to unlock the blockchain to tokenize and trade assets. It is dramatically lowering the barriers by providing STO Solutions that represent real-world ownership of assets such as real estate. It is an ecosystem that comprises KYC/AML, broker-dealers, law firms, and exchanges that facilitate the compliance of security tokens.

Polymath had partnered with BlockEstate, a real estate fund in an attempt to use predictive analytics to manage its real estate portfolio. Unfortunately, they decided to shut down the project which would have been the first instance of a real estate property represented by the ST-20 Security Token protocol.

Harbor

A platform designed for tokenizing private investments, Harbor seeks to leverage blockchain technology to record, maintain, and transfer ownership of investments including real estate. It provides a decentralized protocol to establish and maintain standardization for tokenized securities. Announced with much fanfare, Harbor’s STO Development Services for a real estate project (Hub at Columbia REIT) had collapsed.

ReitBZ

Security Token Offering Development by ReitBZ is the first of its kind for the Brazilian real estate market. It combines local expertise and global reach to offer the best investment opportunities for its investors. They claim that real estate is a flourishing market in Brazil and after a period of economic lockdown they have started to recover and it is the right time to invest in this asset class.

Challenges

Though blockchain technology could have a drastic effect on the real estate industry, it is still in its early stages and full adoption and adaptation across the real estate industry come with its own set of challenges like regulatory uncertainty and general lack of understanding in the budding industry as many are yet to fully explore its potential applicability.

Though it is clear that this emerging technology has the potential to disrupt the real estate industry, there is a long road ahead before it reaches maturity. We see a strong promise and future regarding its implementation and proper regulation with time and efforts and before we know, we would be buying our new house on the blockchain.

Real Estate Investing Through Security Tokens

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Myths About Cryptocurrencies That You Should Know About

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Are you one of those who find cryptocurrencies confusing? In this article, we will clarify commonly judged misconceptions about Cryptocurrency. So let’s get started.

Table of Contents

  • Overview 
  • Myths About Cryptocurrency 
  • The Verdict 

Overview 

The advent of cryptocurrencies has taken the world by storm. Despite its popularity, people do not have a solid understanding of how cryptocurrencies work, and they find them confusing. Let’s start from the basics and understand what cryptocurrencies are. Cryptocurrency is a virtual currency, or we can define it as a medium of exchange that employs cryptographic protocols to ensure the safety and authenticity of transactions. Such virtual money works on the concept of the underlying technology, Blockchain, that is not regulated by any authority, and this is the reason why cryptocurrencies and their transactions are completely secured. But sadly, the concept of Cryptocurrency is still in its infancy and is generally misunderstood, contributing to the circulation of several misconceptions surrounding it.

Want to know more about cryptocurrencies and become a Certified Cryptocurrency Expert? Wait no more. Get enrolled in Blockchain Council today! 

Myths About Cryptocurrency 

Now, without further delaying, let’s explore the misconceptions surrounding cryptocurrencies.  

1. Bitcoin is the only crypto asset that matters. 

We all know that Bitcoin is the first-ever Cryptocurrency because of which it is the most widespread cryptocurrency people own. The reason why it is still the most likable Cryptocurrency is due to the reason that it has the highest liquidity in the crypto space.domain and the higher the liquidity ratio, the easier it is to sell a cryptocurrency at market price. But believing that it is the only crypto asset that matters would be a mistake. 

Although the market capitalization of Bitcoin tops the list, other cryptocurrencies have also started gaining public attention. According to the recent reports, Ethereum’s economy hits new milestones in transfer value and market cap. 

2. Cryptocurrency is an illegal form of digital money and used for criminal activities.

This is one of the biggest myths that cryptocurrencies hold. Although crypto-assets can be used for several purchases such as food and clothing, it is a belief that people use Cryptocurrency generally to make illegal purchases. The wider range of people believe that it is easier to buy illegal objects with Cryptocurrency than other payment systems. Undoubtedly it is true that crypto assets were previously used in some illicit activities, but the assumption that they are mainly used for such criminal purposes is entirely wrong. It is used considerably less commonly for illicit activity as compared to major currencies such as the US Dollar.

3. Cryptocurrencies are easily hackable 

Another misconception surrounding digital assets, such as cryptocurrencies, is that they are easy to hack. Although crypto-related exchanges have proven vulnerable to hackers in the past, to state they can be hacked easily is entirely false. These are difficult to hack because of its underlying technology, Blockchain, which ensures that hacks are unlikely. Crypto transactions are secured as transactions are stored in blocks of encrypted data. 

4. Crypto exchanges are not taxable

Crypto-based exchanges are assumed to be tax-free, but this is not true. Such exchanges need to register and pay tax on their earnings. As there are no central authorities or banks involved with crypto transactions, but that does not mean they are not taxable. There is plenty of confusion regarding certain aspects of how cryptocurrencies are supposed to be taxed. Cryptocurrencies are in the eyes of the IRS, and it has a new tax form out for all crypto traders. Last year, the IRS sent letters in order to amend or pay fines on unreported crypto profits to around 10,000 taxpayers that were connected somehow with crypto assets.

5. Assumptions that Cryptocurrencies will be banned 

The majority of the people fear investing and trading with Cryptocurrency because they believe that cryptocurrencies are unregulated and will be banned in the near future. But it is also important to consider that many countries, including U.S., India, and others, have taken a positive step towards cryptocurrencies. Instead of leaning more towards crypto restriction, countries are keen on learning regulations, which indicates that Cryptocurrencies are here to stay. 

The Verdict 

From the above discussion, you must have gained a clear understanding of the myths and why they are unreal. While few still hesitate and do not accept Cryptocurrency as payment, they are various popular retailers such as Microsoft, Overstock, KFC Canada, and others that accept cryptocurrencies for their respective purposes. Apart from the points that we have mentioned, keep in mind there are several other myths that exist too. 

If you want to understand all the ins and outs of Cryptocurrency and become a Certified Cryptocurrency Expert/Trader, Blockchain Council, a globally recognized online organization, can help you learn the fundamental and technical aspects of cryptocurrencies. 

 To get instant updates about Blockchain Technology and to learn more about online Blockchain Certifications, check out Blockchain Council.

Myths About Cryptocurrencies That You Should Know About

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South Korean Blockchain Advocacy Group Calls for Tax Laws Postponement 

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However, while adoption appears to be on the rise in South Korea, industry experts have also urged the government to create an encouraging environment or players. 

A Short Implementation Window 

Most notably, industry experts have called on the government to nix its proposed crypto tax plan for now. Earlier this week, local news source News1 Korea reported that the Korea Blockchain Association (KBA), a blockchain and crypto advocacy group, requested that the government postpone implementing its crypto tax framework for 18 months.

The South Korean government’s proposed tax plan has been a particular sticking point for many in the country’s crypto space. The plan was published by the Ministry of Finance and Economy in July, with the Ministry stipulating that taxation for digital assets is a necessity as these assets continue to penetrate the traditional financial system. 

Under the new framework, the Ministry plans to categorize all gains from digital assets and intangible assets as taxable income. However, any income below 2.5 million won (about $2,000) per year falls below the Ministry’s minimum threshold and will be tax-exempt. All income above the minimum threshold will be subject to a 20 percent tax rate, on par with the tax rates for most other capital gains and taxable income in the country.

The tax laws apply to local and foreign transactions that trade digital assets via South Korean exchanges.  Under the new rules, exchanges will be responsible for all tax deductions and paying the monies to the Korean customs office. 

While the laws should come into effect on October 1, 2021, the BKA asks for a delay until January 1, 2023. As News1 Korea explained, the window for adjustment is too short, and exchanges won’t effectively adapt to the new tax regime. As the advocacy group explained, exchanges will be allowed to report on trades using the soon-to-be-outdated tax policy until the end of September. A 24-hour period will be too short for them to make the necessary changes.

Ineffective Reporting 

Oh Gap-soo, the BKA’s Chairman, also explained that a suspension of the tax code would be necessary since it is the first time the government is getting involved in digital asset taxation. He pointed out the possibility of regulators not accepting crypto firms’ reports – a possibility that could lead to sub-optimal operation

“The industry is having a great deal of difficulty in preparing for taxation because it is not equipped with a tax infrastructure in a situation where it is uncertain whether or not the business will continue ahead of the enforcement of the Special Payment Law.”

Besides the taxation laws, South Korean exchanges are also fighting back against the government’s mandatory identity verification rules. As Digital Today reported last week, the new regulations require exchanges to collect several details from their customers, including and especially social security numbers. However, that is a direct contradiction to the country’s Personal Information Protection Act.

South Korean Blockchain Advocacy Group Calls for Tax Laws Postponement 

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Bitstamp says its users are now covered against a broad web of crime

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Digital asset exchange Bitstamp has beefed up its insurance measures to combat the inherent uncertainties associated with the crypto space.

“The policy covers an array of crime-related cases, such as employee theft, loss while the assets are stored at any premises, loss in transit, loss caused by computer fraud or funds transfer fraud, and loss related to legal fees and expenses,” an Oct. 15 statement from Bitstamp detailed with regard to the firm’s updated insurance measures. 

Cryptocurrency offers added freedom when compared to traditional finance, allowing users to transfer the assets they own with greater ease and self-sovereign control. Such advantages can also make theft more viable, however. To combat this, a number of crypto exchanges now boast various forms of customer insurance, including Binance, with its Secure Asset Fund for Users, or SAFU for short.

Bitstamp’s new insurance policy is likewise tailored specifically for crypto. It is made possible through the involvement of a number of players, including U.K.-based Paragon International Insurance Brokers. “Our crime insurance policy is designed with the specifics of digital assets in mind,” Paragon’s senior vice president, Jeff Hanson, said in the statement, adding:

“Traditional insurance policies do not translate directly into digital assets, which is why we’ve created and placed a policy to fit the bespoke requirements of highly respected and forward-looking exchanges such as Bitstamp, which value the safe custody of their customers’ funds above all else.”

Bitstamp’s added coverage stacks on top of insurance that BitGo, a digital asset trust and security company, provides to the platform. As part of their offering, 98% of Bitstamp’s crypto holdings are kept securely offline using the BitGo platform.

Bitstamp says its users are now covered against a broad web of crime

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