Brazil’s leading cryptocurrency exchange, Mercado Bitcoin raised $200 million from the SoftBank Latin America Fund, Mercado’s parent company 2TM Group announced today. The investment values 2TM Group at $2.1 billion and is SoftBank’s largest capital injection in a Latin America crypto company.
“This series B round will afford us to continue investing in our infrastructure, enabling us to scale up and meet the soaring demand for the blockchain-based financial market,“ says Roberto Dagnoni, executive chairman and CEO of 2TM Group. “We want to be the main solution provider for corporate players.”
The São Paulo-based exchange aims to increase the number of listed assets (the exchange currently lists approximately 50 tokens) and grow its 500-member team to 700 by year’s end. Further plans involve regional expansion with focuses on Mexico, Argentina, Chile and Colombia and growth acceleration across 2TM Group’s portfolio, which also include digital wallet provider MeuBank and digital custodian Bitrust (both are subject to regulatory approval).
Founded by brothers Gustavo and Mauricio Chamati in 2013, Mercado Bitcoin has become the largest cryptocurrency exchange in the country. In January, it scored its first financing round co-led by G2D/GP Investments and Parallax Ventures with participation from an array of other investors.
Over the same period, trade volume on the exchange had increased to $5 billion, surpassing the total for its first seven years combined. “Every single month [of this year], we are trading the full volume of 2020,” says Dagnoni.
“Mercado Bitcoin is a regional leader in the crypto space and the leading crypto exchange in Brazil. They are tapping into a huge local and regional addressable market measured by potential use cases for crypto,” says Paulo Passoni, managing partner at SoftBank’s SBLA Advisers Corp. (which manages the SoftBank Latin America Fund).
“At SoftBank we look to invest in entrepreneurs who are challenging the status quo through tech-focused or tech-enabled business models that are disrupting an industry – Mercado Bitcoin is doing just that.”
Despite the rapid growth of the local crypto market, Brazilian regulators have been lagging behind. In 2018, Brazilian antitrust watchdog, the Administrative Council for Economic Defense (CADE), opened an investigation into the country’s largest banks for allegedly abusing their power by closing accounts of crypto brokerages. The probe was ongoing as of last year.
In April 2020, Senator Soraya Thronicke proposed an extended set of rules for Brazil’s “virtual asset” businesses, custodians and issuers, consumer protection, crypto taxation and criminal enforcement, however no apparent action has been taken on the bill so far. Nonetheless, Dagnoni says the nation’s regulatory environment is favorable, and the company is closely working with regulators “to build a consistent framework for alternative digital investments in Brazil, in line with its vision of a convergence of the traditional and blockchain-based financial markets.”
I report on cryptocurrencies and emerging use cases of blockchain. Born and raised in Russia, I graduated from NYU Abu Dhabi with a degree in economics and Columbia University Graduate School of Journalism, where I focused on data and business reporting.
SoftBank Group Corp. is a Japanese multinational conglomerateholding company headquartered in Minato, Tokyo. The Group primarily invests in companies operating in the technology, energy, and financial sectors. It also runs the Vision Fund, the world’s largest technology-focused venture capital fund, with over $100 billion in capital, backed by sovereign wealth funds from countries in the Middle East.
The company is known for the leadership by its founder and largest shareholder Masayoshi Son. It operates in broadband, fixed-line telecommunications, e-commerce, information technology, finance, media and marketing, and other areas.
SoftBank was ranked in the Forbes Global 2000 list as the 36th largest public company in the world, and the second largest publicly traded company in Japan after Toyota.
Led by 8 former Morgan Stanley Executives, Phemex’s goal is to build the worlds most trustworthy cryptocurrency derivatives trading platform. Its leverage a “User-Oriented” approach to develop far more powerful features than any existing exchange.
Above all, they place customers first. All of the features and tools are designed with this philosophy in mind. This is why their development team is directly available and constantly gathering feedback, comments, and requests from our community on social media.
Back in 2017, as experienced professional Wall Street traders and investors, Jack Tao and other founding members of Phemex identified a lack of professionalism, trustworthiness, and customer support within the crypto industry. In the following two years, the number of users engaging in cryptocurrency trading increased significantly.
Nevertheless, existing exchanges showed little to no improvement. Realizing the seriousness of the problem, the team left Wall Street and founded Phemex in the summer of 2019. They then dedicated themselves to building a simple, efficient, but most importantly, a trusted cryptocurrency trading platform. Then, on November 25th, 2019, the Phemex platform officially went live.
Pheme (Fama) is the personification of fame and of the public’s voice in Greek mythology. While MEX stands for mercantile exchange. This name was chosen to highlight our vision and their dedication to stand as the most trustworthy trading platform.
From day one, their mission was and will always continue to be the empowerment of individuals. They want everyone in this world to have access to the right set of tools that will allow them to manage risk efficiently and trade simply. They sincerely believe this to be a fundamental right that all traders should enjoy.
For its crypto derivatives products, Phemex allows you to trade with leverage. This means that you can receive a higher exposure towards a certain crypto’s price increase or decrease, without actually holding the necessary amount of assets. You do this by “leveraging” your trade. In simple terms, this means that you borrow from the exchange to bet more. You can get as much as 100x leverage on this platform.
Leveraged trades are risky though. For instance, let’s say that you have 100 USD in your trading account and you bet this amount on BTC going long (i.e., going up in value). If BTC then increases in value with 10%, you would have earned 10 USD. If you had used 100x leverage, your initial 100 USD position becomes a 10,000 USD position so you instead earn an extra 1,000 USD (990 USD more than if you had not leveraged your deal).
As we mentioned above, in terms of Spot Trading, Phemex has adopted a zero trading fee model. Instead they just charge for monthly Premium Memberships (prices are $9.99 for 30 Days, $19.99 for 90 Days and $69.99 USDT for 365 Days). Becoming a premium member will also allow you to set conditional spot orders, you will enjoy hourly withdrawals with no limits, and will be able to gift trial premium memberships to friends.
With respect to contract trading, Phemex separates between “takers” and “makers”. Let’s describe these terms real quick. Every trade occurs between two parties: the maker, whose order exists on the order book prior to the trade, and the taker, who places the order that matches (or “takes”) the maker’s order. We call makers for “makers” as their orders make the liquidity in a market. Takers are the ones who “take” this liquidity by matching makers’ orders with their own..
Phemex previously didn’t accept any other deposit method than cryptos, so new investors were restricted from trading here. Starting 18 June 2020, however, they partnered with a company called Banxa which is a payment gateway that accepts credit and debit card purchases of crypto.
Since then, Phemex has also partnered with Koinal, Coinify, MoonPay, and Mercuryo. You have a variety of payment options (ranging from bank transfers to Apple Pay) and rates to fit your needs.
To our understanding, Phemex does not charge any fees of their own when you withdraw crypto from your account at the platform. Accordingly, the only fee you have to think about when withdrawing are the network fees. The network fees are fees paid to the miners of the relevant crypto/blockchain, and not fees paid to the exchange itself. Network fees vary from day to day depending on the network pressure.
Generally speaking, to only have to pay the network fees should be considered as below global industry average when it comes to fee levels for crypto withdrawals.
Today, Bitso, the largest cryptocurrency platform in Latin America, announced it raised $250 million in Series C investment. The round, co-led by hedge fund giant Coatue and investment firm Tiger Global, puts the company’s valuation at $2.2 billion, making it one of the largest fintechs in the region and its first crypto unicorn. Other investors in the round include Paradigm, BOND, Valor Capital Group, QED, Pantera Capital and Kaszek. In December 2020, Bitso raised a $62 million Series B at an undisclosed valuation.
The investment will be used to continue providing access to cryptocurrencies for local residents and expand operations, says Bitso’s co-founder and CEO Daniel Vogel. “We want to make sure that folks in the region really benefit from accessing these global financial services that are getting built on top of blockchain.”
Founded in 2014, the Mexico City-based company offers multiple cryptocurrency products and services to more than 2 million customers across Mexico, Argentia and Brazil. These include the Bitso App that lets users buy, sell, send, or receive bitcoin and 8 other cryptocurrencies; Bitso Alpha, a professional-grade crypto trading platform; and Bitso Business, a suite of cross-border products for local enterprises.
The company claims it has more than a 95% crypto market share in Mexico and more than a 60% share in Argentina. In January 2021, Colombian regulators reportedly chose Bitso as one of the nine companies allowed to test crypto use cases under the government’s pilot program. Bitso is also preparing to introduce a crypto derivatives trading platform and interest-bearing crypto accounts.
In the U.S., Bitso is perhaps better known for its crypto remittances services conducted in partnership with San Francisco-based Ripple, which also invested in the company. Last year, Bitso processed about $1.2 billion in remittances, amounting to 2.5-3% of the yearly remittances volume between the U.S. and Mexico, according to Vogel. The lion’s share of those flows was powered by Ripple’s On-Demand Liquidity Service (ODL), delivering instant cross-border payments without pre-funding through Ripple’s cryptocurrency XRP.
In December, several cryptocurrency exchanges and platforms, including Coinbase and Crypto.com, delisted XRP following SEC’s lawsuit accusing Ripple of running a $1.38 billion unregistered offering of XRP, which the regulators deemed a security and not a cryptocurrency. Vogel noted that the joint initiative “lost some of the momentum” but declined to provide details on the company’s current relationship with Ripple. The company later issued a separate statement in an email to Forbes: “Bitso has not made any changes to XRP trading at this time and will keep monitoring the regulatory situation.”
In Latin America, crypto is used primarily for speculation, trading and capital mobilization, driven by remittance needs, the devaluation of local currencies and expensive financial services.
But even though steep exchange rates and the constant devaluation of fiat or local currencies favor crypto adoption, there are still barriers to entry for new users, explains Samuel Gómez Milano, executive director and co-founder of CoinGroup, a Venezuelan research firm specialized in crypto and blockchain technology.
According to Gómez Milano, there is no overarching body that regulates crypto and blockchain-related financial services in the region. Mexico was the first country to enact a comprehensive fintech law in March 2018, but the legislation is ambiguous about crypto, providing a clear framework only for banks and fintechs’ use of virtual assets.
Another disadvantage of crypto usage in the country is the economy’s over-reliance on cash, which accounts for 90% of all transactions, and a largely unbanked population. Instead of setting up their own crypto wallet through popular platforms, those interested in venturing into crypto prefer to find experienced individuals who already have a wallet and offer their services for a commission.
“WhatsApp, Telegram, Facebook Messenger, are the default channels people use to buy and sell crypto in Latin America. They prefer to find an experienced user with a good reputation, even when there are platforms like LocalBitcoins, Buda and Panda, because they think it’s easier,” says Gómez Milano. Even though there’s a higher risk of getting scammed using these popular messaging apps, he thinks people prefer this method because crypto is still confusing to many, and direct communication helps bridge that information gap.
Despite these challenges, remittances could be one of the main drivers of increased crypto usage. Mexico alone took in $4 billion in remittances in March last year, up 35% from the year prior. In 2020, amid the economic slowdown, remittance flows into the region remained largely the same compared to the previous year, at $96 billion.
Banks like Western Union WU-0.6% are the most expensive channel to send remittances, with an average fee of 10.9% per transaction, requiring the recipient to collect the money at an agent location if it’s needed immediately. Direct account deposits can take up to five days. In comparison, the transfer cost via cryptocurrency is 0.1% and goes directly to the recipient in a matter of minutes.
“In Mexico, Bitso made evident the advantages of using crypto for remittances. The exponential growth of this platform proves that it is really helping [recipients],” says Eloisa Cadenas, CEO of consulting firm CryptoFinTech and professor at the Mexican Stock Exchange Group.
Cadenas believes this inefficiency provides ample opportunity for crypto exchanges to grow in the financial services industry. Banks in Latin America are known for lending at high interest rates and charging exorbitant fees with APRs as high as 70% in countries like Mexico, compared to 5.9% crypto platforms like Nexo charge.
“The remittances market will continue to grow as long as the U.S. is rich and Latin America isn’t,” says Gómez Milano. “There will always be migration, driven by the financial and labor disparities [between them].”
*Interviews with Samuel Gómez Milano and Eloisa Cadenas were conducted in Spanish and translated by co-author Maria Abreu.
I report on cryptocurrencies and emerging use cases of blockchain. Born and raised in Russia, I graduated from NYU Abu Dhabi with a degree in economics and Columbia University Graduate School of Journalism, where I focused on data and business reporting.
I’m an assistant editor at Forbes covering money and markets. Before joining Forbes, I worked at NextEra Energy, Inc. developing and implementing successful media relations and public relations campaigns in the energy industry.
I graduated from Stetson University with a degree in Finance, and have a master’s degree in Journalism and International Relations from New York University, where I worked as a staff writer for Latin America News Dispatch and New York Magazine’s Bedford + Bowery.
The firm’s co-founder Alan Howard already has a personal stake in One River Digital Asset Management’s crypto ventures.
Brevan Howard, a United Kingdom-based asset management firm, is reportedly planning to directly invest in digital assets after more than a year of exposure to the crypto space.
According to a Bloomberg report, Brevan Howard Asset Management will be allocating 1.5% of the $5.6 billion in its main hedge fund to crypto — roughly $84 million. A source with knowledge of the matter said two co-founders of crypto investment firm Distributed Global, Johnny Steindorff and Tucker Waterman, would be leading Brevan Howard’s foray into crypto.
The asset management firm will reportedly be focusing on “a wide range” of cryptocurrencies in addition to Bitcoin (BTC), betting that the price of the crypto asset will continue to rise. At the time of publication, BTC’s price is $62,775, having fallen 1.3% in the last 24 hours.
The potential investment from a major hedge fund wouldn’t be the first time Brevan Howard has had exposure to the crypto market. The firm’s billionaire co-founder Alan Howard has a 25% stake with One River Digital Asset Management, a United States-based hedge fund that purchased $600 million worth of Bitcoin and Ether (ETH) last year.
Part of a seemingly growing trend among hedge funds, Brevan Howard is not alone in dipping its toes into crypto markets. In February, New York-based global investment firm M31 Capital filed paperwork with the U.S. Securities and Exchange Commission to launch a Bitcoin hedge fund. Billionaire hedge fund manager and philanthropist Ray Dalio has also called Bitcoin “one hell of an invention” and compared it to gold.
Bitcoin could be at the start of a “massive transformation” into the mainstream and on the path to become “the currency of choice for international trade,” according to leading investment bank Citi, which noted the cryptocurrency’s meteoric rise in value in recent years and a growing interest from institutional investors as potentially setting the stage for widespread success.
In a report published Monday, Citi analysts said the world’s most popular cryptocurrency was at a “tipping point” between widespread adoption or a “speculative implosion.”
Bitcoin’s growing use as a payment tool, the increasing availability of digital wallets, and institutional interest from the likes of Tesla and Mastercard have all helped buoy confidence in the cryptocurrency and could see it become the leading medium for international trade in the future, Citi said.
The analysts described Bitcoin as the “North Star” of the blockchain ecosystem, with its underlying technology launching an entirely new domain of the digital economy around it.
However, there are a number of risks and obstacles that could see the Bitcoin bubble burst, the analysts warned, and widespread changes to the market would be required for Bitcoin to be adopted more widely.
Dampened institutional investment in the post-Covid-19 world would remove a key pillar of support for Bitcoin, Citi said, and anticipated regulation and oversight—which runs counter to the anti-establishment ideology underpinning the cryptocurrency—could also “cause many of the most innovative developers and entrepreneurs to exit the ecosystem,” the analysts wrote.
Bitcoin is one of the most volatile asset classes around. It has a bumpy and storied history since it was outlined in a paper in 2009, moving from practically worthless to an all time high of over $58,000 a coin in February 2021 (the price has since dropped to around $47,000) with several significant troughs and peaks in between. At its highest, Bitcoin’s market capitalization exceeded $1 trillion. As with the bulk of its history, Bitcoin is still driven by retail investors, who billionaire philanthropist Bill Gates warned not to get drawn in by the “mania” and enthusiasm of Elon Musk who has money to spare should things go wrong.
“I think bitcoin is really on the verge of getting broad acceptance by sort of the conventional finance people,” Tesla CEO Elon Musk said on Clubhouse earlier this year.
In October, PayPal finally welcomed cryptocurrencies to its platform, believed by many to be a precursor to it moving into the mainstream. PayPal will support four different cryptocurrencies—bitcoin, ethereum, litecoin and bitcoin cash—and will expand the service to Venmo in 2021.
I am a London-based reporter for Forbes covering breaking news. Previously, I have worked as a reporter for a specialist legal publication covering big data and as a freelance journalist and policy analyst covering science, tech and health. I have a master’s degree in Biological Natural Sciences and a master’s degree in the History and Philosophy of Science from the University of Cambridge. Follow me on Twitter @theroberthart or email me at firstname.lastname@example.org
Paypal’s cryptocurrency partner Paxos has raised $142 million in Series C funding led by Declaration Partners, an investment adviser to the family office of Carlyle Group billionaire David Rubenstein. The round closed on November 24 and also includes investments from PayPal Ventures PYPL+2.3% and Paxos’ previous investors RRE Ventures and Liberty City Ventures.
In total, the firm has raised $240 million in venture funding, making it one of the highest funded firms in crypto, after Circle, which has raised $271 million. The firm declined to disclose how much the investment valued the company.
New York City-based Paxos was founded in 2012 under the name itBit. It was among the first bitcoin startups to operate as a regulated trust company, offering custody services for U.S. customers under New York banking law. In October, payment giant Paypal launched a cryptocurrency trading service in partnership with Paxos, letting customers buy and spend bitcoin.
“Our pipeline has expanded very significantly from having been in the millions of customers maybe a year ago to, now, billions of customers through partnerships,” says Paxos’ CEO and co-founder Charles Cascarilla. “That is partly why we need to raise this capital, to really take advantage of the growth opportunities.”
As part of the investment, the company plans to develop new products that help institutional clients track traditional assets like securities and commodities on a blockchain, a process called tokenization. “We always want to be able to think of other ways that we can grow our business, including, potentially, acquisitions and new hires,” adds Cascarilla. Part of the capital raise will be invested in regulatory infrastructure, which Cascarilla cites as one of the key reasons for Paxos’ success with onboarding strong institutional clients, such as PayPal and Credit Suisse CS+0.4%.
The investment news comes the day after bitcoin breached the $20,000 mark for the first time ever. Paxos likely played a role in cryptocurrency’s meteoric rise over the second half of the year. On October 21, PayPal announced its entry into the cryptocurrency market by integrating Paxos’ API-based crypto brokerage service and giving its 350 million customers access to bitcoin and a handful of other cryptocurrencies.
PayPal’s embrace of crypto coincided with bitcoin’s rally, and some analysts have even expressed the view that the online payment giant is actually fueling the spike. Earlier in July, the American division of the U.K.-based fintech firm Revolut integrated Paxos’ technology into its app, enabling the fintech’s customers in 49 U.S. states to buy, hold, and sell bitcoin and ether.
Paxos however shies away from positioning itself as a purely crypto-native venture, stating its commitment to provide infrastructure for multiple asset classes. In February, the firm facilitated what it describes as the first live application of blockchain technology for U.S. listed equities when Credit Suisse and Nomura Instinet began using the startup’s technology to settle equity trades.
Paxos Settlement Service is a private, permissioned blockchain network allowing two parties to bilaterally settle securities trades directly with each other without using a middleman. In September, French banking giant Societe Generale became the third broker-dealer utilizing the service. To date, 15,000 trades worth approximately $75 million have been settled on the platform.
On December 8, Paxos filed an application for a national trust bank charter with the Office of the Comptroller of the Currency (OCC), a regulatory agency that supervises banks and branches and agencies of foreign banks. If granted, Paxos could become the first custodian of digital assets to be regulated at both the state and federal levels. In 2015, it obtained a trust charter from the New York State Department of Financial Services (NYDFS) to become one of the first regulated companies in the state to offer crypto products and services. Follow me on Twitter or LinkedIn.
I report on cryptocurrencies and emerging use cases of blockchain. Born and raised in Russia, I graduated from New York University Abu Dhabi with a degree in economics and Columbia University’s Graduate School of Journalism, where I focused on data and business reporting.
The partnership announcement between the payments giant PayPal and the issuer of the major stablecoin Paxos Standard Token (PAX) might reportedly be made this week. PayPal is planning to bring crypto trading to its user base and has chosen New York-based Paxos to handle the new service’s supply of digital assets, reported CoinDesk, citing “two people familiar with the matter.”As for which cryptoassets PayPal would include in its rumored crypto trading option is not yet known and might be revealed with the official announcement of the partnership itself.
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Credit card giant Visa today announced it is connecting its global payments network of 60 million merchants to the U.S. Dollar Coin (USDC) developed by Circle Internet Financial on the ethereum blockchain. The digital currency is now valued at $2.9 billion.
While Visa itself won’t custody the digital currency, effective immediately, the partnership will see Circle working with Visa to help select Visa credit card issuers start integrating the USDC software into their platforms and send and receive USDC payments. Circle itself is also going through the same Fast Track program. In turn, businesses will eventually be able to send international USDC payments to any business supported by Visa, and after those funds are converted to the national currency, spend them anywhere that accepts Visa.
After Circle itself graduates from Visa’s Fast Track program, likely sometime next year, Visa will issue a credit card that lets businesses send and receive USDC payments directly from any business using the card. “This will be the first corporate card that will allow businesses to be able to spend a balance of USDC,” says Visa head of crypto Cuy Sheffield. “And so we think that this will significantly increase the utility that USDC can have for Circle’s business clients.”
The partnership, in conjunction with an earlier $40 million investment Visa led in a cryptocurrency startup for holding similar assets issued on a blockchain, a recent blockchain patent application for minting traditional currency on a blockchain, and an increasing amount of work directly with central banks, is the latest evidence that the credit card giant sees the technology first popularized by bitcoin as a crucial part of the future of money.
“We continue to think of Visa as a network of networks,” says Sheffield, a five-year veteran of Visa, who took over as head of crypto last June. “Blockchain networks and stablecoins, like USDC, are just additional networks. So we think that there’s a significant value that Visa can provide to our clients, enabling them to access them and enabling them to spend at our merchants.”
Leading up to the partnership, Visa had already onboarded 25 cryptocurrency wallet providers as part of its Fast Track program—including Fold and Cred— each of which can now pilot the USDC integration. Going forward, other cryptocurrency wallet providers like BlockFi, which yesterday announced it will launch its bitcoin rewards Visa next year, will be able to use USDC in the first quarter of 2021.
Visa estimates that $120 trillion in payments annually are made using checks and instant wire transfers, costing as much as $50 each, regardless of the size of the transaction. Since USDC settles on the ethereum blockchain, transactions can close in a little a[s] 20 seconds and, importantly, can be done for nearly free, Visa believes its vast array of merchants could choose to use this nearly instant alternative form of payment. “We worked closely with digital currency wallets to issue Visa credentials,” says Sheffield. “And helping them receive USDC payouts can add additional value for them.”
Visa’s entrance into the digital dollars world is the culmination of two years of work at the credit card giant. At the core of Visa’s evolution is a new understanding of itself as a network of networks, according to Sheffield, some of which Visa owns, like Visa Net, and others it doesn’t, such as the Swift interbank payment network, local ACH networks and now USDC.
On the product side, Visa’s cryptocurrency work is largely focused on its Fast Track program for helping companies obtain credentials for issuing Visa credit cards. Most notably, in February 2020, Coinbase became the first cryptocurrency company to be granted principal membership status by Visa, meaning it can in turn issue cards to others. Relatively few of those companies are using crypto-assets like bitcoin, according to Visa’s global head of financial technology, Terry Angelos. While the majority of the crypto-plays consist of “tokenized versions of fiat,” similar to USDC, backed by traditional currency, issued on a blockchain and spendable via the card.
On the research side, Visa’s work in the area is largely focused on investing in startups and filing patents. Last year, Visa made its first public investment in blockchain by coleading a $40 million Series B in digital currency infrastructure provider Anchorage, which builds technology for storing assets issued on a blockchain. Angelos compares the investment to Visa’s 2015 backing of e-commerce infrastructure provider Stripe, which could go public this year at a $36 billion valuation. While Anchorage is a much earlier-stage startup, founded in 2017, the firm has already developed a number of technological breakthroughs, including privacy-preserving technology called Zether, which JPMorgan used in its own cryptocurrency project.
Especially relevant to today’s news, Sheffield describes Anchorage’s cryptocurrency custody technology as a possibly crucial component for central banks looking to issue digital currencies (CBDCs). While stablecoins like USDC are backed by currency issued by a central bank, a CBDC would be issued directly by the central bank and could lead to a reimagining of traditional finance. While former JPMorgan exec Daniel Masters argues CBDCs could make commercial banks unnecessary, Sheffield says they’ll still have a place in the future of currency issued on blockchains. “We are actively working with commercial banks to help them understand and navigate transitions to digital currency based products.”
On a related note in March 2020, Visa’s research team applied for a patent for technology that could be used by central banks to issue any fiat currency, of which dollars, yen and renminbi are an example. At the time, a spokesperson indicated that the technology was as likely to be used for the creation of a new product, as it was to “protect” its existing businesses. Sheffield further clarified: “We are continuously exploring and filing patents for innovative technologies like digital currency and CBDC.”
On their way to today’s announcement, both Visa and Circle have undergone a number of high-profile crypto-pivots. In October 2019, after making a huge bang by being a member of Facebook-founded Libra Association’s consortium of companies building a stablecoin backed by a basket of fiat currencies, Visa left the organization.
That same month, Circle, which has raised $271 million in venture capital, initiated a fire sale on two of its most valuable assets, starting with cryptocurrency exchange Poloniex, followed by Circle Invest in February 2020. Another product, Circle Pay, no longer lets customers buy or sell bitcoin or any other cryptocurrency and its once-vaunted OTC desk is closed.
As all this was happening, the firm, whose full name is, tellingly, Circle Internet Financial, rebranded its home page with a focus exclusively on stablecoins and central bank digital currencies. Circle founder Jeremy Allaire, whose last company, online video site Brightcove, went public in 2012 and is now valued at $659 million, envisioned the company as a payment rail for the internet.
While his focus was initially on bitcoin, then other cryptocurrencies, USDC is built on top of ethereum, meaning tiny amounts of the cryptocurrency ether are used as “gas” to pay for the transactions. While the drastic changes to the business are notable, the underlying mission appears to have remained the same.
USDC was first minted in September 2018. Unlike bitcoin, it is backed 1:1 by U.S. dollars, which are audited by accounting firm Grant Thornton to ensure the actual amount of the asset in circulation is at least equal to the dollars backing the assets. While exchanges and marketplaces that directly accept USDC as payments (without Visa or another card provider) are responsible for their own AML-KYC compliance, reserves are governed by the nonprofit Centre Consortium founded by Visa principal member Coinbase and Circle, with other members forthcoming.
To help manage all this and open up membership to other companies, the consortium yesterday announced its first CEO, David Puth, the former leader of CLS Bank International, a similarly structured foreign exchange settlement consortium owned by 70 financial institutions.
The first use-case for stablecoins was as an on-ramp and off-ramp for bitcoin investors who wanted to enter or exit positions faster than traditional banks could do with dollars. USDC’s market cap, representing the total amount of dollars in circulation, has been rising with the price of bitcoin since March 2020, when bitcoin started an eight-month, 271% ascension to $19,134, according to CoinGecko. Over the same period, USDC has grown 525% to almost $3 billion today. While the first stablecoin, Tether, is still king with a market capitalization of $18 billion, a number of others are now also competing, including DAI at $1 billion and Binance USD at $662 million.
Then, this March, Circle started offering services to let businesses accept USDC as payment, similar to those that run on FedWire, Swift and ACH rails, starting at about $200 a month. But instead of taking up to three days to close, transactions denominated in USDC and other stablecoins close almost instantly. So far about 1,000 businesses including institutional traders, banks, neobanks, on-demand delivery companies and gaming companies have opened accounts. Allaire says he’s in talks with a number of financial institutions exploring USDC as a possible upgrade to their corporate treasuries.
In June 2020 Circle announced it would start issuing USDC on the faster Algorand blockchain, which settles on average in four seconds, as part of what it describes as a “multichain framework.” In rapid-fire succession the firm then announced the Stellar and Solana blockchains would also be used to issue USDC. Algorand and Solana issuances are already live, with Stellar issuances scheduled to be minted in Q1 2021.
While onboarding to crypto trading markets was the first stablecoin-use case, things are evolving. In March 2020 USDC was approved as a form of collateral for loans issued using the MakerDAO protocol, the industry leader of a new financial category called DeFi, or “decentralized finance,” where services typically offered by banks, like lending, are offered via open-source software that allows individuals to directly connect. Of the $14.5 billion now locked in DeFi platforms according to data tracking site DeFi Pulse, nearly 20% are on Maker, with nearly half of that, or about $403 million worth, now in the form of USDC.
Long before DeFi was called DeFi, though, it went by a different, more illuminative name: DAO, short for “Distributed Autonomous Organization.” After some early high-profile failures the concept was rebranded with the focus on finance. Even the name MakerDAO hearkens back to this earlier, if occasionally overshadowed vision for the future of organizations. Allaire describes that future as a world where everything from contractual agreements to the payment of taxes are built into plumbing that directly connects individuals and enterprises in a wide range of new kinds of business relationships.
“Imagine a capital marketplace that is for anyone who needs capital, or anyone who needs to offer capital that has the same efficiency that Amazon has for e-commerce, the same efficiency that YouTube has for content, effectively, capital markets with the efficiency of the internet, which is essentially zero,” says Allaire. “And that will ultimately return trillions of dollars in value back to the economy, it will reduce costs for every business in the world, it will accelerate the way in which individuals can participate in commercial activity and commerce activity, in conducting their labor and interacting with businesses around the world.” Follow me on Twitter or LinkedIn. Send me a secure tip.
I report on how blockchain and cryptocurrencies are being adopted by enterprises and the broader business community. My coverage includes the use of cryptocurrencies and extends to non-cryptocurrency applications of blockchain in finance, supply chain management, digital identity and a number of other use cases. Previously, I was a staff reporter at blockchain news site, CoinDesk, where I covered the increasing willingness of enterprises to explore how blockchain could make their work more efficient and in some cases, unnecessary. I have been covering blockchain since 2011, been published in the New Yorker, and been nationally syndicated by American City Business Journals. My work has been published in Blockchain in Financial Markets and Beyond by Risk Books and I am regularly cited in industry research reports. Since 2009 I’ve run Literary Manhattan, a 501 (c) (3) non-profit organization dedicated to showing Manhattan’s rich literary heritage.
Today In Crypto 03/12 – Visa Partners With Ethereum Digital-Dollar Startup That Raised $271 Million, Rare Indicator Flashes Buy Bitcoin Now With Historical Upside Average Move Of 50X, Paypal Is Outstripping The Supply Of Newly Mined Bitcoins, Insiders Are ‘very optimistic’ About How Fast Eth2 Will Unfold, CEO of $7 Trillion Fund Sees Bitcoin as ‘Global Market’ Asset, Bearish – New Congressional bill says it would be ‘unlawful’ to issue stablecoins, ‘provide any stablecoin-related service’ without federal approval Mega Launch December 2020 $500M Crypto Project Earn Crypto Passively More Details Here http://cryptoaitrading.com/ Learn how you can earn ETH in a decentralized way and how I earned over $1M in ETH with this platform – http://watch.earnethdailysystem.com/ Learn how you can earn TRXin a decentralized way and how I earned over $800K in TRX with this platform – http://watch.earntrxdailysystem.com/ Get free access to Bitcoins Wealth Club system and free course “secrets to grow wealth in Bitcoin” http://bitcoinswealthclub.com Our Facebook Group https://www.facebook.com/groups/bitco…
According to the latest report we have, there are about 51 million active crypto traders worldwide. This is an absolutely staggering figure, which amounts to about 0.6% of the worldwide population! For context, there are about 25 million software developers worldwide.
We couldn’t help but think: how many of those 51 million people deploy any sort of strategies in their trading? The answer is, on the balance of probabilities, not many. Which means a lot of people would benefit tremendously from educating themselves about trading strategies and finding what works best for them or maybe picking up a good cryptocurrency trading course.
In this article, we’re going to dwell upon some of the entry-level, yet undervalued crypto day-trading strategies and show why your trade execution and adherence to rules, in most cases, matter even more than the strategy itself.
What are the most undervalued cryptocurrency trading strategies?
You’ve probably done quite a bit of research into what trading strategies are typically deployed when day-trading cryptocurrencies. And thus, you probably know that there are a LOT of strategies out there. Needless to say, most of them are outright useless. So, what parameters should you apply when selecting the right strategy? Well, one thing is for sure: do not overcomplicate. Simplicity is key, and the simpler your strategy, the easier it would be to master (provided it works, of course).
Simple Moving Averages
Here’s an example of a common SMA strategy:
Moving Averages: 200, 12 and 26-period Exponential Moving Averages (EMA).
Whenever the price is below the 200-EMA, you should trade with a bearish bias (only take short-side trades), and vice-versa.
Whenever the 12-period EMA crosses below a 26-period EMA, this generates a sell signal and you should sell (or cover an existing long position). When the 12-period EMA crosses the 26-period EMA, you should buy (or cover an existing short position). It is also considered good practice to place your stop-loss below a previous low.
This strategy is a great, simple indicator of convergence and divergence between medium-term momentum and the short-term momentum, showing you when the price is accelerating in either direction, up- or downside.
An example of how this could be successfully executed is shown on a screenshot below:
A Confluence of RSI and MACD
The two most-used indicators – Relative Strength Index (RSI for short) and the Moving Average Convergence-Divergence indicator (MACD) can be proven very efficient when used together.
But in order to do so efficiently, you have to understand exactly how they work. Let’s see how each of them is calculated.
“RSI is computed with a two-part calculation that starts with the following formula:
The average gain or loss used in the calculation is the average percentage gain or losses during a look-back period. The formula uses positive values for the average losses” (Source: Investopedia).
For the second step, we need at least 14 data-points. Once we have them, we calculate the RSI and plot that along the price-action chart.
“MACD is calculated by subtracting the long-term EMA (26 periods) from the short-term EMA (12 periods)” (Source: Investopedia).
Thus, the MACD has three elements: the 12 and 26-period exponential moving averages, and the arithmetical difference between the two.
Both the RSI and the MACD are oscillators, meaning that both indicators calculate their values based on the price.
These indicators are best used when they complement each other. Meaning, if you have a confluence – both indicators are giving the same signal, either to buy or to sell, then you act on it; otherwise – you don’t.
A basic example would be:
On a 4-hour time-frame chart, when the MACD is producing a bullish signal (the 12-period EMA crosses the 26-period EMA to the upside), you execute a buy order. The trick here is to make sure that the RSI is complementing the MACD: if the price-action is not overbought (RSI is below 70), then you can execute the buy order. If the RSI is >70, this would mean the price-action is overbought and the indicators are conflicting with each other. And vice-versa: if the MACD is showing a sell signal, but the RSI is oversold (<30), you should not follow this sell signal.
On the example above, we can see how a trader has entered a trade when the MACD gave a bullish signal, placing the stop-loss under the previous low, and the RSI was not in the overbought territory. Once the RSI crossed 70, the trader exited their position and secured a safe, winning trade. You can also simply reduce risk (close part of the position) once the RSI hits 70.
This one, being the only long-term strategy on the list, is probably the simplest as well. Basically, you just buy a fixed amount (or sell short, but be careful with that) of what you think are the most promising cryptocurrencies over set periods of time, averaging down (or up, if it’s short) their buy-in price.
The strategy has two distinct advantages: you don’t have to worry about the day-to-day price action since you’re buying for the long term, and it’s not as demoralizing if the market goes down – because then you just improve your average buy-in price.
A good example would be buying bitcoin once a week during the first quarter of 2019 when the price was consolidating between $3.3k and $4.3k. If you were actively trading during that period of time, chances are you’d get eviscerated as the price action was extremely choppy. However, if you DCA‘d, you’d be ripping the rewards just three months later, when the price hit $13k.
Why Execution Matters Just as Much as Having the Right Strategy
Probably by far the most overlooked aspect of trading out there: adhering to your game-plan. While it is detrimental to have an actually working, well-backtested strategy to trade with, it is just as important to always remember that you have to actually play by the rules set in the said strategy.
Many traders suffer from emotional trading, a phenomenon known in the trading community to be the most challenging aspect of trading. This includes things like:
Chasing your losers – widening your pre-determined stop-losses to “give the trade more breathing room”
Using excessive leverage when being on a losing streak
Executing trades before the actual signals are triggered by the indicators you’re using
Cutting the winning trades too early
Experienced traders will tell you that the right execution of trades is what comprises most of your P&L. Thus, setting clear rules, adhering to them and constantly checking whether you need to improve your execution is key to the successful deployment of any strategy.
So, what are the questions you should ask yourself when deciding whether you’ve executed well? Here’s a list:
Did I execute that trade because my strategy told me to do so, or was there an emotional element to it?
If you’re on a losing streak, try to see whether you’re just trying to “get rich quick”, instead of entering and exiting a trade in a systematic way
Are you accounting for slippage and trading fees when setting your stop-losses?
Are you using the right leverage?
Are you overtrading? Even if you’re a day-trader, making 5-10 trades per day is probably too much and you will get destroyed by trade fees
Are you proactive when analysing the trades and polishing your strategy? Avoid making the same mistake and thinking that “it was a good trade” in hindsight. If a pattern looks good on paper but fails in action – consider stopping using it
Also, it is a good practice to use a trading journal – novice traders who start making notes about their trades to conduct periodic analysis very often report improved results.
Last but not least, make sure you’re using the right trading software. That’s where GoodCrypto really shines – it is probably the best trading platform for cryptocurrency on mobile devices, allowing you to access 20+ exchanges, set custom alerts, take advantage of advanced order-types available on all supported exchanges and use custom alerts!
The digital yuan can replace cash if it meets four conditions: greater efficiency, lower transaction costs, enough economic scale with commercial value, and people’s acceptance.
Former President of the Bank of China Li Lihui has said that the launch of the digital yuan is close and imminent. According to Li, the currency, which is currently at testing phase, could replace fiat currency in China if it meets four conditions.
The imminent launch of the currency has garnered excitement among investors and online searches about the impact of digital yuan and cryptocurrencies, in general, has seen a surge. In a live streaming talk on People’s News on 5 May, he said that the digital currency is different from other payment platforms such as Alipay and WeChat pay in the fact that the digital yuan has no association with any third party. In addition, he mentioned four conditions that need to be met in order for Yuan t replace other forms of payment.
“Whether the digital Yuan can become the dominant form of currency and mainstream payment means, depends on whether it has greater efficiency, lower transaction costs, enough economic scale with commercial value, and people’s acceptance.” Image Courtesy: Pixabay