Hong Kong is relaxing its crypto regulation to allow retail investors to trade digital assets directly. A licensing regime for crypto platforms that allows retail crypto trading is reportedly set to be enforced in March next year.
Hong Kong is reportedly relaxing its strict cryptocurrency regulation with a plan to allow retail crypto trading, Bloomberg reported Thursday, citing people familiar with the matter.
A mandatory licensing regime for cryptocurrency platforms that allows retail crypto trading is set to be enforced in March next year, the publication conveyed, elaborating:
Hong Kong plans to legalize retail trading for crypto starting in March after years of skepticism — a stark contrast to mainland China’s ban.
Moreover, regulators are seeking to allow retail exchanges to list large cryptocurrencies, like bitcoin (BTC) and ether (ETH), the news outlet added. The listing rules are likely to include criteria such as the token’s market value, liquidity, and inclusion in third-party crypto indexes.
Gary Tiu, executive director at crypto firm BC Technology Group, commented:
Introducing mandatory licensing in Hong Kong is just one of the important things regulators have to do. They can’t forever effectively close the needs of retail investors.
Michel Lee, executive president of digital asset financial services group Hashkey, explained that Hong Kong has been trying to create an all-encompassing crypto regime, citing tokenized stocks and bonds as a potentially more important segment in the future. “Just trading digital assets on its own is not the goal. The goal is really to grow the ecosystem,” he was quoted as saying.
Hong Kong’s top financial regulator, the Securities and Futures Commission (SFC), introduced a voluntary licensing regime in 2018. It restricted crypto trading platforms to clients with portfolios of at least HK$8 million ($1 million). However, the tough regulation turned away many crypto businesses and only two firms — BC Technology Group and Hashkey — were approved.
Many people are skeptical of the new crypto regulation, however. Bitcoin Association of Hong Kong co-founder Leonhard Weese shared:
The kind of conversations I’ve had was that people still fear there’ll be a very strict licensing regime. Even if they’re able to deal directly with retail users, they’re still not going to be as attractive or as competitive as overseas platforms.
The SFC’s director of licensing and head of the fintech unit, Elizabeth Wong, said last week: “We’ve had four years of experience in regulating this industry … We think that this may be actually a good time to really think carefully about whether we will continue with this professional investor-only requirement.” She noted that Hong Kong could also authorize exchange-traded funds (ETFs) to offer exposure to mainstream crypto assets.
A student of Austrian Economics, Kevin found Bitcoin in 2011 and has been an evangelist ever since. His interests lie in Bitcoin security, open-source systems, network effects and the intersection between economics and cryptography.
South Korean prosecutors are seeking to freeze 3,313 bitcoins at two cryptocurrency exchanges allegedly tied to luna founder Do Kwon. The coins were moved soon after a South Korean court issued an arrest warrant for the Terraform Labs co-founder. Luna Foundation Guard has denied transferring the coins. Korean Authorities Ask Crypto Exchanges to Freeze Bitcoin.
South Korean authorities have reportedly asked cryptocurrency exchanges Kucoin and Okx to freeze 3,313 bitcoins allegedly tied to Terraform Labs co-founder Kwon Do-hyung, also known as Do Kwon. The coins were transferred to the trading platforms soon after a warrant was issued for Kwon’s arrest in South Korea.
On Tuesday, an official at the Seoul Southern District Prosecutors’ Office confirmed to Bloomberg that requests have been sent to the two cryptocurrency exchanges to freeze the 3,313 BTC.
The coins were transferred to the trading platforms from a wallet allegedly linked to Luna Foundation Guard (LFG) that was created on Sept. 15, according to crypto researcher Cryptoquant. The researcher told the publication: Cryptoquant specified new bitcoin addresses owned by LFG based on transaction patterns, adjacent flows and material non-public information.
However, Luna Foundation Guard denied the allegation Tuesday evening. The group tweeted its treasury’s bitcoin address, adding: “LFG hasn’t created any new wallets or moved BTC or other tokens held by LFG since May 2022.” Do Kwon Says: ‘I’m Making Zero Effort to Hide’
The luna founder’s whereabouts are currently unknown. He was believed to be in Singapore but the Singapore police force said earlier this month that he is currently not in the city-state. Kwon has maintained that he is not “on the run,” tweeting Monday: I’m making zero effort to hide. I go on walks and malls.
The Seoul Metropolitan Police have asked various crypto exchanges to ban Luna’s capability of withdrawing company funds, the report said. It was not clear which exchanges were asked or whether they have complied. Terraform Labs lost $30 billion this month when Terra’s UST stablecoin and LUNA cryptocurrency went into a death spiral, costing investors billions globally.
The associated Luna Foundation Guard was charged with protecting UST’s peg using a war chest of billions of dollars in bitcoin (BTC); it ultimately failed. Terraform Labs CEO Do Kwon is already under the financial crimes microscope and is facing a tax evasion investigation by a South Korean police unit known as the “Grim Reaper.” Luna Foundation Guard did not respond to a request for comment by press time.
A South Korean court issued an arrest warrant for Kwon on Sept. 14. He is accused of fraud after the collapse of the cryptocurrency luna (now called luna classic (LUNC)) and stablecoin terrausd (UST). In addition, the country’s ministry of foreign affairs is reportedly planning to revoke his passport.
Moreover, Interpol has issued a Red Notice for the Terraform Labs co-founder. “A Red Notice is a request to law enforcement worldwide to locate and provisionally arrest a person pending extradition, surrender, or similar legal action,” Interpol’s website details, adding that “Red Notices are issued for fugitives wanted either for prosecution or to serve a sentence.”
By: Kevin Helms
A student of Austrian Economics, Kevin found Bitcoin in 2011 and has been an evangelist ever since. His interests lie in Bitcoin security, open-source systems, network effects and the intersection between economics and cryptography.
When the Luna crypto network collapsed, it’s estimated that $60 billion got wiped out of the digital currency space. Algorithmic stablecoins (UST) are not the same as Tether or USD Coin, which are backed by actual dollars or assets stored in a bank. An arrest warrant has been issued for Do Kwon, the co-founder of Terraform Labs, where the sister tokens Luna and TerraUSD were held.
Terra network and its leader, Do Kwon, rose to prominence in the cryptocurrency world over the course of four years, all ending in a disastrous fall from grace. The Luna crypto network collapsed in what’s considered the largest crypto crash ever, with an estimated $60 billion wipeout, shaking the global digital currency market.
There are two stories regarding Luna crypto: the TerraUSD/UST stablecoin and the actual Luna coin. Once Luna and UST crashed, there was a total liquidity crunch in the cryptocurrency space that caused an even more catastrophic loss of value. The crypto community still hasn’t recovered.
You may have heard of TerraUSD and Luna, here is a quick breakdown of what they are exactly. Lots of moving parts within the Luna network ahead of its collapse.TerraUSD (also known as UST) and Luna are two sister coins on the same network.
Terra is a blockchain network, similar to Ethereum or Bitcoin, that produces Luna tokens. The network was created in 2018 by Do Kwon and Daniel Shin of Terraform Labs. Terraform Labs created the UST coin to be an algorithmic stablecoin on the Terra network. While other stablecoins (USDC or Tether) are fiat-backed, the UST would not be backed by real assets. Instead, the value of UST would be backed by its sister token, Luna. More on that later.
Stablecoins are supposedly safe havens in the crypto space since they’re meant to have a fixed value of around 1 USD. The goal being, a steady store of value for investors, unlike other volatile coins (like ethereum).Luna was Terra’s blockchain native token, similar to how ether is used on the Ethereum network. Luna had four different roles in the Terra network:
A method to pay for transaction fees in the Terra network.
A mechanism for maintaining Terra’s stablecoin peg.
Staking in Terra’s delegated proof of stake (DPoS) to validate network transactions.
Participation in the platform’s governance by adding to and voting on proposals when it comes to changes in the Terra network.
How much was Luna worth?
A Luna coin was going for around $116 in April and ended up dropping to a fraction of a penny before being delisted. Before that, the coin went from being worth less than $1 in early 2021 to creating many crypto millionaires within a year. This led to Kwon’s cult hero status among (some) retail crypto investors. Many success stories popped up in the media about how regular folks were able to get rich from Luna.
The Luna token skyrocketed about 135% in less than two months until its peak in April 2022. The largest incentive was that you could stake your UST holdings on the Anchor lending platform for a 20% annual yield. Many analysts felt that this absurd rate was unsustainable.
The Anchor Protocol was a decentralized money market built on the Terra blockchain. This platform became popular for its aforementioned 20% yield for UST holders who deposited their tokens on the platform. Then Anchor would turn around and loan the deposit to another investor. Many skeptics were concerned about where the money came from to pay these rates. Some considered this an obvious Ponzi scheme. At one point, as much as 72% of UST was deposited in Anchor because the platform was the primary driver of demand for Terra.
What happened to UST?
Before we look at this crypto disaster, we need to discuss stablecoins briefly. A stablecoin is pegged to a more stable currency like the US dollar. Tether and USDC are both tied to USD. Stablecoins are used to hedge against volatility in the crypto space. For example, let’s say that Ether’s price is $1,000. You could exchange one Ether for 1,000 USDC tokens. When investors expect a hit in the crypto market, they put their money into stablecoins to protect their assets.
The UST coin was not backed by an actual US Dollar but rather an algorithmic stablecoin. The belief was that Terraform Labs could use clever mechanisms along with billions in Bitcoin reserves to maintain the peg of UST without the backstop of the USD. To create UST you have to burn Luna. So, for example, when Luna token’s price was $85, you could trade one token for 85 UST. This deflationary protocol was designed to ensure there was long-term growth for Luna.
For UST to retain its peg, one UST could be changed for $1 worth of Luna at any time. If UST slipped, traders could make money from buying UST and then exchanging it for Luna. Both Luna and UST crashed once UST lost its peg to the dollar, which was what qualified it as a stablecoin.
TerraUSD was risky because it wasn’t backed by cash, treasuries or other traditional assets like the popular stablecoin tether. The stability of UST was derived from algorithms that linked the value to Luna. Many experts were skeptical that an algorithm could keep two tokens stable.
Why did LUNA crash?
The Luna crypto crash was caused by its connection to TerraUSD (UST), the algorithmic stablecoin of the Terra network. On May 7, over $2 billion worth of UST was unstaked (taken off the Anchor Protocol), and hundreds of millions of it were quickly liquidated. There’s debate as to whether this happened as a response to rising interest rates or if it was a malicious attack on the Terra blockchain. The huge sell-offs brought down the price of UST to $0.91, from $1. As a result, traders started to change 90 cents worth of UST for $1 of Luna.
Once a large amount of UST had been offloaded, the stablecoin started to depeg. In a panic, more people sold off UST, which led to the minting of more Luna and an increase in the circulating supply of Luna. Following this crash, crypto exchanges started to delist Luna and UST pairings. Long story short, Luna was abandoned as it became worthless.
What happened after the Luna crash?
The Luna meltdown impacted the entire cryptocurrency market, which was already highly volatile and experiencing difficulty at the time. It’s estimated that the Luna crash ended up tanking the price of bitcoin and causing an estimated loss of $300 billion in value across the entire cryptocurrency space. Crypto leaders Voyager and Celsius filed for bankruptcy. Three Arrows Capital (3AC) was forced into liquidation.
Many people lost their life savings and suffered financial hardships due to the Luna crypto crash. If you do a quick search online, you’ll find many of these terrible stories. Many loyal Luna fans (who referred to themselves as “Lunatics”) took to Reddit threads to share their disastrous stories. One retail crypto investor even confessed that they lost their savings of $20,000 in Luna.
The only winners were those who exited their positions before the crash. One winner that we have to highlight is the hedge fund Pantera Capital. They saw a 100x return on an initial investment of $1.7 million. The company liquidated its Luna position prior to the collapse for a return of $171 million.
A 51% attack doesn’t mean the attacker can send BTC from your wallet or account; it only means the blockchain has been compromised, and double-spending of crypto is imminent. Blockchains like Bitcoin and its contemporaries, with larger mining nodes and hash power, are less likely to be attacked due to the financial cost involved.
Blockchain technology is no longer a new word in this digital era. The name prevalently comes to mind anytime Bitcoin cryptocurrency is mentioned in any discourse. Unfortunately, the connection between blockchain and Bitcoin can’t be ruptured because the Bitcoincryptocurrency brought blockchain to the limelight in 2008.
For clarity’s sake, Bitcoin is a blockchain on its own, while its native cryptocurrency that is used to incentivize miners is BTC—Bitcoin cryptocurrency. The cryptocurrency was birthed through one of the several use cases of blockchain in the finance industry.
Consensus Mechanisms
A consensus mechanism is when the majority agrees on something or disagrees. Imagine you conduct a survey with 100 different people from different locations about how sweet a particular cookie is. If all 100 say it is sweet or otherwise, their opinion is unanimous, which marks a consensus.
The consensus mechanisms employed in all blockchain networks are similar to the example above. In the case of blockchain, miners replicate the audience that took the cookie survey. Back to Bitcoin mining.As mentioned earlier, the consensus mechanism of bitcoin is the PoW, where miners compete to solve complex cryptographic puzzles with their mining machines. Whoever can solve this puzzle faster and produces the winning hash wins the right to add the newly verified transaction data to a block.
Such a validator will be rewarded with the native crypto of the blockchain—BTC.What usually determines who wins the right to fill a new block with transaction data is having a mining machine with a high hash rate—i.e., machines that can produce more hashes per second. This can be achieved by having more machines and combining their mining power or getting machines with higher mining power to mine faster than your competitors.This suggestion can be likened to participating in a raffle where having more tickets increases your chances of winning. Now, what if an unscrupulous or malevolent actor has a higher mining power than other miners? Then, a 51% attack is imminent!
What Is a 51% Attack?
A 51% attack occurs when a malevolent miner in a blockchain network gains control of the blockchain mining power. This means that the miner—in this case, an attacker— will be able to mine faster than other miners because the attacker now controls more than 50% of mining power.
Having 51% control—which is the least percentage required to take over a blockchain network—is ominous.
Difference Between a 51% Attack and a 34% Attack
A 34% attack is known with the Tangle consensus algorithm. The attacker only falsifies the blockchain’s ledger by approving or disapproving transactions. In contrast, the 51% attack gives attackers control of a blockchain such that they can disrupt mining and the entire blockchain.
Implications of a 51% Attack on Blockchain and Bitcoin
When an attacker controls 51% mining power in a blockchain, then the security of such a blockchain has been compromised, leaving the attacker in control of transactions. Below are the implications of what’s bound to happen due to a 51% attack:
Network Disruption by Delaying Validation of Transactions: The attacker disrupts the blockchain network by attacking the miner’s computing resources. In such a scenario, there’ll be a delay in the validation and storage of transactions in a block. As a result, the blockchain is hampered, causing the attacker to process transactions faster than the miners or even prevent another miner from adding blocks.
Double Spending: Double spending occurs when miners spend their crypto twice on a particular blockchain network.How?
Imagine if the attacker had previously purchased a Ferrari 250 GTO with 1,600 BTC; he paid for the car and got the delivery of the vehicle. During a 51% attack on the BTC blockchain, the attacker can reverse the 1,600 BTC transferred to the seller’s wallet such that he keeps the car and the BTC. The BTC can then be spent for another purpose. This is known as double-spending.
Reduction in Miner’s Reward: Since miners are usually rewarded for validating transactions on a blockchain, in the wake of a 51% attack, the attacker steals the shares of other miners, making them earn less than what they’re supposed to earn.
Diminishes Blockchain’s Credibility
A 51% attack on a blockchain network will diminish the credibility of such a blockchain. Both miners and investors will not trust the security framework anymore. This might lead to abandoning the project or some exchanges delisting the crypto from their market.
Below are the examples of blockchains that have suffered a 51% attack:• BSV—Bitcoin Satoshi Vision—was attacked in August 2021• ETC—Ethereum Classic—was attacked thrice in August 2020
• BTG—Bitcoin Gold— was attacked twice; once in 2018 and then in 2020
• GRIN was attacked in 2020, the attacker controlled about 58% of GRIN’s hash rate
i. Limited Hash Power – Blockchains running on the PoW mechanism should limit the hash power of each miner to 50% or lesser. This will pre-empt such an attack
ii. Using PoS or DPoS A PoS- Proof-of-Stake- the mechanism is another consensus mechanism for validating blockchain transactions. It is eco-friendly because no power is needed, and it doesn’t require a sophisticated machine. PoS uses coin owners’ machines to mine crypto. Investors stake their coins in return for an opportunity to validate blocks.DPoS, on the other hand, means Delegated Proof-of-stake. It is a decentralized PoS where the crypto community appoints validators by voting. If a validator is perceived to be compromising the network, they are also voted out by the community.
Conclusion
A 51% attack doesn’t mean the attacker can send BTC from your wallet or account; it only means the blockchain has been compromised, and double-spending of crypto is imminent. Blockchains like Bitcoin and its contemporaries, with larger mining nodes and hash power, are less likely to be attacked due to the financial cost involved.
Liquidity is a topic that always pops up now and then in both the crypto community and beyond. We are sure that there is no crypto enthusiast who hasn’t heard about Bitcoin liquidity. The question is how to calculate liquidity and how to find the most liquid exchange? Let’s dig out the truth, but first things first.
Some Terminology
Liquidity is a key parameter of a certain market, which reflects the “saleability” of a certain asset. Making it simple – liquidity reflects the price change, which will be caused by filling the Market order of a certain size. In a perfectly liquid market, one would be able to sell any amount of an asset at the same price without moving it.
Thus, liquidity is an opportunity to sell assets on the market without influencing their price. Liquidity could be measured not only for certain assets but also for the whole market in general. Let’s dig deeper and determine how liquidity affects crypto trading with and what you should know about it.
The liquidity of a cryptocurrency is determined by a number of factors – from its popularity to real-world use cases of the traded asset. To better understand the concept of liquidity, it’s crucial to introduce the Order Book of a certain market. The name says it all – order book is a list of other people’s confirmed desire to purchase a traded asset at a certain limit price. When someone needs to buy or sell the crypto-asset immediately, they will have to place Market orders, which will execute against the available orders in the order book.
How To Detect Liquid Exchange?
For example, someone plans to Buy or Sell 1 BTC having an appropriate amount of USDT and BTC on balance. Let’s review some of the options to do this (it’s worth mentioning that at the time of writing, BTC is worth something around $9,200).
First, let’s look at BTC/USDT pair on the Binance exchange.
In the right section of the trading interface, you can see the above-mentioned order book and the last price at which BTC was bought or sold. From the order book, we can see that the lowest price at which someone is ready to Sell BTC is 9,189.04 and there is 4.026387 BTC available at this price.
If the user will submit a Market Buy order at the moment of the screenshot, her order will be matched against that offer and the last price of BTC/USDT would become $9,189.84, the amount of BTC available at this price will decrease and become 3.206387 BTC. In this case, liquidity on a Binance BTC/USDT pair on the Buy-side was good enough for a 1 BTC order size allowing the trader to Buy the BTC at the best available price.
At the same time, we can see from the other side of the order book that the highest price at which someone is willing to Buy BTC is 9,189.83, but they are willing to buy only 0.693640 BTC at this price. Consequently, if the user submits a Market Sell order for 1 BTC, he will ‘eat’ through 3 levels of the order book. Such an order will consume entire Buy offers at 9,189.83 and 9,189.71 levels and most of the 9,189.47 price level, moving BTC/USDT price to $9,189.47. At the same time, the All Buy orders sitting in the Order Book with the prices of $9,189.83 and $9,189.71 would be 100% filled, while the Buy orders with the price of $9,189.47 would be partially filled for the size of 0.30136 BTC. The average execution price of the 1 BTC Market Sell would be:
0.69364*9,189.83 + 0.005*9,189.71 + 0.30136*9,189.47 = $9,189.72. The difference of $0.11 between the observed best Buy offer in the Order Book at 9,189.83 and effectively achieved the average execution price of 9,189.72is called price slippage. Price slippage represents a loss for the trader due to insufficient liquidity on the Buy side of the Binance order book. Were the trader to send a Market Sell order for the amount greater than 1 BTC, the price slippage incurred would increase substantially.
Besides the direct price slippage implications of exchange order book liquidity, one could also try to derive various trading signals from it. In the example above, since the liquidity of BTC/USDT pair on Binance appears to be better on the Sell-side of the order book, a simple conclusion could be drawn that the Selling pressure is high and that high Level 1 Sell liquidity represents market makers’ opinion that the short-term market price movement will be downwards. However, since this prediction is quite obvious, it might not come to fruition.
Binance, though, isn’t the only exchange on the market. Let’s check what would happen if the same user would try to complete the same orders on let-it-be BitRabbit exchange. Frankly speaking, we’ve never heard of this exchange and strongly don’t recommend using it for trading. One of the reasons, apart from the funny name and doubtful security of the exchange, would be presented below.
On a screenshot, you can see the same market (BTC/USDT) on the BitRabbit exchange. The first notable difference is that the price of BitRabbit is around $30 lower than on Binance. Though, it’s not the biggest problem with this screenshot.
If the user will (for any reason) deposit the necessary funds to purchase and sell 1 BTC worth of assets – the situation will be different compared to Binance.
If she will try to submit a Market Buy of 1 BTC for USDT the order will be executed at the price that is nowhere near the Last Price of $9,163.98. The thing is that all the Sell orders sitting in the whole visible part of the order book aren’t enough to fill the order of 1 BTC. Even more, they won’t even fill a third of it, which means that the average price of 1 BTC purchased on this exchange at Market would be over $9,182, representing a price slippage of almost $20. Remember, that on Binance the price slippage incurred by the same 1 BTC order was just $0.11.
In the case of Market Sell Order of 1 BTC on BitRabbit, the slippage would not be so bad, though the order will ‘eat’ through the first three levels of the order books and fill at fourth – the price will slip less than a dollar.
This simple comparison gives you a basic idea of why liquidity is such an important characteristic of an exchange. If an order of 1 BTC can create a slippage of 20+ dollars, imagine what would happen next time BTC rallies some $500+ in 15 minutes and you are trying to exit or enter a large position on an exchange like BitRabbit.
What Influences Liquidity?
Exchange listings.
The asset’s presence on several trading platforms increases its liquidity in most cases. The more exchanges have listed an asset, the more opportunities for traders to trade it. So, the trade volume is increasing.
Though, often, listings don’t provide liquidity. It is a typical situation when one of the assets in TOP 50-150 of CoinMarketCap is listed on 10 exchanges, while it has more than $100,000 daily volume only on 1-2 of them.
Though, in general, new cryptocurrencies are characterized by low liquidity due to their absence from major exchanges.
Use cases outside the crypto industry.
A holy grail of every crypto project is wide user adoption though, real adoption was achieved only by a few of the coins on the market. Apart from the obvious BTC use case as a “digital gold” and store of value, Ethereum managed to get some real usage back in 2017, when a boom of Smart Contracts and ICOs occurred. It now seems to gain traction with DeFi.The most recent example of wide enough adoption is Binance Coin, which became a lottery ticket to the IEO hype of 2019. Though, both of these cases still weren’t a “wide adoption outside of the crypto industry” – more like wide adoption inside of it.
Popularization.
The stronger the crypto community scales, the more liquid in general the crypto assets are. This fact is undeniable and the proof is the performance of Bitcoin in 2017, when this coin rapidly gained at price, volume, social media mentions, and Google trends.
However, if the cryptocurrency is new and a sufficient number of crypto enthusiasts haven’t heard about it, then, most certainly, it lacks trust from the crypto community. The asset would be considered of low liquidity or, in the worst case, manipulated by bot trading and fake market making. At the same time, the asset has every chance to change its position, drawing attention to it with marketing activities, constant development, and a solid project team behind the project.
Cryptocurrency Liquidity as an Indicator of Confidence
The liquidity of cryptocurrencies is undoubtedly an important parameter that you should pay attention to when devising your trading strategy.
Think about buying a $10,000 worth of some TOP-500 altcoin, while it’s daily trading volume is $20,000. In the best case, if you don’t want to push the price up to and incur huge slippage, you’d have to accumulate your position over a week or even a few weeks. Illiquid assets often become subjects of speculations, and pump and dump schemes. It is easier for pumpers to influence the price of an illiquid asset by buying or selling a large chunk of the daily volume of this asset. In case, if the asset has low liquidity, this “large chunk” of daily volume would cost the pumpers less money.
Sadly, Pump and Dump schemes are still a thing in the crypto market. As a result, the vast majority of the new crypto traders fall victims to at least one of those schemes. Mainly, if a new crypto enthusiast goes through an experience like this, basically a new crypto market hater would go to social media and spread the word that the whole industry is a fraud.
Current Market Liquidity
One notable thing about crypto markets and industry, in general, is that despite the speculative spikes, one could see a slow but steady adoption. It is reflected not only in the real-world use cases, a growing number of wallets, and on-chain transactions but also in the growing liquidity of the crypto market in general. It can be seen when looking at the crypto trading volume on major exchanges 2020 volumes are much higher than in 2017 or 2018 when BTC was all over the news with an all-time high price of $18,000-$20,000.
Though undeniably growing in general, crypto liquidity is shifting. Some of these shifts represent secular trends such as growing liquidity of derivative and margin exchanges vs the spot exchanges, and some are cyclical, such as periodic shifts from BTC to altcoins (altseason) and back, or the evergreen ‘flippening’ of BTC and ETH.
Liquidity definition including break down of areas in the definition. Analyzing the definition of key term often provides more insight about concepts. Liquidity can be defined as: Availability of resources to meet short-term cash requirements. Liquidity has to do with our ability to pay for short term obligations, whether they be short term debt or operational needs.
A Bitcoin wallet from 2009 made its first transfers in over 11 years, sending $400,000 worth of BTC to an exchange. While the crypto-community hailed the return of Satoshi, some points show it is unlikely to be Bitcoin’s mysterious creator.
Is Satoshi Moving BTC?
A tweet by WhalePanda, a popular account that tracks crypto movements from prominent wallets, said late on May 20 that 50 BTC moved from a 2009-dated block. The coins are part of the so-called “Satoshi Generation,” meaning the earliest-ever records of mined blocks and bitcoin when Satoshi was somewhat active till 2010.
News spread like wild-fire across crypto-twitter, with some joking Craig Wright, the self-proclaimed “Faketoshi,” is probably going to claim ownership.
But some points prove none of the above might be likely. Data from the aptly-termed “Patoshi Pattern,” the presence of early miners, and even the possibility of the wallet not being Satoshi’s at all.
Venture capitalist Nic Carter tweeted about the “Patoshi Pattern:”
keep in mind it’s basically impossible to prove that Satoshi _didn’t_ mine these coins, but the best research we have suggests that Satoshi mined a specific set of blocks, of which this is not one. https://twitter.com/SDLerner/status/1263124405997142019 …
Sergio Demian Lerner@SDLerner
Replying to @zackvoell @lopp
Thanks. It’s very rustic. It needs a search function.
You’re right. Block 3654 it not in the Patoshi pattern.
nic carter@nic__carter
Here’s a visualization of the Patoshi pattern with the block that was just spent. The blocks believed to be Satoshi have a specific pattern in the nonce, which this block does not have
Simply put, a large number of blocks mined in the early days have similarities which suggest they were mined from the same computer. Such blocks are part of the “Patoshi Pattern,” and the block values from the 50 BTC movement yesterday do not belong to this pattern.
However, while the Patoshi pattern is a theory and debated by researchers, it proves block 3,654 – the one in question – does not belong to Satoshi.
“It’s very rustic. It needs a search function. You’re right. Block 3654 is not in the Patoshi pattern.”
Many Miners in 2009
Popular consensus assumes Satoshi, the now-deceased Hal Finney, and Martti Malmi were the only miners on the network in 2009. But Malmi states Bitcoin found its way on a cryptography mailing list in January 2009, meaning “many people” could have tested it at the time, and hence, gained a bunch of BTC in rewards.
It’s fully possible that the addresses might be an associate of Satoshi, but there’s no way to determine this point currently.
Binance founder Changpeng Zhao chimed in with his view of the situation. He noted:
“Relax guys. Much higher chance it is NOT Satoshi than it is. Although can’t be proven, this has happened a few times before.”
Meanwhile, some crypto-accounts on Twitter kept the jokes coming in:
A reclusive Japanese American man named by Newsweek as the founder of bitcoin, denies any involvement with the digital currency. But only after leading reporters on a car chase through LA. Sign up for Snowmail, your daily preview of what is on Channel 4 News, sent straight to your inbox, here: http://mailing.channel4.com/public/sn
Hong Kong is relaxing its crypto regulation to allow retail investors to trade digital assets directly. A licensing regime for crypto platforms that allows retail crypto trading is reportedly set to be enforced in March next year.
Moreover, regulators are seeking to allow retail exchanges to list large cryptocurrencies, like bitcoin (BTC) and ether (ETH), the news outlet added. The listing rules are likely to include criteria such as the token’s market value, liquidity, and inclusion in third-party crypto indexes.
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