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Crypto News Updates

Robinhood Adds 9.5 Million New Crypto Users As Mainstream Adoption Continues

As cryptocurrencies continue to surge to new highs and bask in the media’s limelight, Robinhood reported major growth in the number of users trading crypto on their platform. According to their blog post, the California-based broker saw its crypto user base grow to an all-time high of 9.5 million — up approximately 558% from 1.7 million in the previous quarter. 

Robinhood began offering cryptocurrencies on its platform back in 2018. Since then, its offerings have grown to include Bitcoin, Ethereum, Litecoin, Dogecoin and Ripple, among others. The company recorded six million new customers on its crypto platform in the first two months of 2021 — a milestone growth considering the platform only saw an average 200,000 customers on a monthly basis.

“We launched Robinhood Crypto to give our customers the opportunity to buy and sell cryptocurrency — in addition to the range of assets offered through our brokerage… But there’s still a lot of work to be done. Since the beginning of the year, Robinhood’s crypto team has already more than tripled and we’re continuing to grow,” said Christine Brown, head of operations at Robinhood Crypto.

Coinbase Set to Go Public This Week: Could Robinhood Come Close To Its Valuation?

As Robinhood looks to go public in the coming months, there’s no doubt that its recent success in crypto will boost its valuation. Last August, the company raised $200 million in its latest funding round. Its Series G tranche valued the stock brokerage at $11.2 billion. 

Tangentially, crypto exchange giant Coinbase is set to go public this week at a potential valuation north of $100 billion. In its earnings report, the exchange touted an impressive 6.1 million active users with strong revenue growth. 

Secondary market (FTX) implies valuation of over $140 billion. Coinbase (CBSE/USD) on Tradingview.com

For what it’s worth, Robinhood has a considerably higher headcount at 9.5 million its crypto platform alone. It’s important to note that, unlike Coinbase, Robinhood’s business model doesn’t rely on commissions and fees. Still, the platform’s massive market share and explosive growth in crypto will likely lead to analysts revising their target valuations.

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Source: Bitcoinist News

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Crypto News Updates

Bitcoin Miner Revenue Hits New All Time High Among Other Key Metrics: Potential Bull Case? 

Total Bitcoin miner revenue has been on a steady uptrend since the start of the year, hitting its new all time high on Friday. According to figures from on-chain analytics site Glassnode, miners are now making an aggregate $64 million from newly minted coins and fees — up nearly 400% since a year ago. It’s important to note that this is despite block subsidy being cut in half post-halving. 

Mining Revenue Up Despite Mining Difficulty and Mean Hash Rate Rising

In fact, Bitcoin’s mining difficulty also recently reached an all-time high — up 66% in the past year and 24% year-to-date. Increases in mining difficulty alongside hash-rate led many in the crypto community to believe that miner capitulation was inevitable. Miner capitulation is a phenomenon where Bitcoin mining is no longer profitable, leading to miners selling their newly minted tokens rather than accumulating them in response to bearish market conditions. 

Paradoxically, this seemed to be the case when Bitcoin’s bullish momentum began to gain traction earlier this year. As BTC rallied to new highs, miners began to sell off their holdings in droves. Bitcoin miner net position change remained negative for the larger portion of the year, hitting a daily outflow of 23,000 on January 26. 

However, outflow began to slow down in February as the major cryptocurrency continued to soar higher. Fast forward to March, miners began to accumulate again in a clear sign of confidence in the digital assetHistorically, a positive net position change indicates that miners are willing to speculate that Bitcoin will continue to appreciate. While on-chain miner volumes don’t represent the entire network, they paint a fairly accurate picture of mining pools and their systemic behavior. 

What Does this All Mean for Bitcoin’s Future Price Action 

So what does this all mean for Bitcoin? With no selling or capitulation as of now, miner fundamentals clearly point to a higher upside for the world’s largest cryptocurrency. In a sign of confidence, mining firms such as Riot Blockchain are investing to massively expand their operations. Trading at $59,744 at press time, Bitcoin continues to consolidate near its all-time high of $61,500. It seems only a matter of time before the digital asset sees another breakout rally.

Monthly chart of Bitcoin BTCUSD on Tradingview.com

Source: Bitcoinist News

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Coinbase Reports Incredible Quarter, But Valuations Remain Uncertain: What to Expect

Crypto exchange giant Coinbase released its earnings for the first fiscal quarter of 2021 ahead of its direct listing on the Nasdaq on April 14. Its revenue skyrocketed to a record-setting $1.8 billion — singlehandedly topping all of last year’s revenue combined. 

The company attributed its parabolic growth and blowout earnings to Bitcoin’s red-hot rally. As the major cryptocurrency retests $60,000, its yearly return on investment (ROI) sits at 900% — an unprecedented level of growth for an asset class with a market capitalization over $1 trillion. 

“We have seen all time high crypto prices drive elevated levels of user activity and trading volume on our platform. We expect meaningful growth in 2021 driven by transaction and custody revenue given the increased institutional interest in the crypto asset class,” Coinbase CEO Alesia Haas said. 

Coinbase Exceeds Expectations in All Major Earnings Metrics

With crypto being all the rage this year, most cryptocurrency exchanges have enjoyed a massive influx in trading volume and users. Per BusinessWire, Coinbase’s trading volume increased by 276% to $335 billion, and its quarterly revenue hit $1.8 billion. Net income for Q1 was estimated to be anywhere between $730 million and $800 million.

The number of active users on the platform increased from 2.8 million in Q4 2020 to 6.1 million in Q1 2021. Verified users (who have undergone KYC procedures) saw a 30% increase to 56 million. As for the exchange’s balance sheet, Coinbase saw its crypto assets appreciate by 1,200% from $17 billion to $223 billion. Considering that the combined market capitalization of the crypto market hit $2 trillion not long ago, this would place Coinbase’s holdings at a whopping 11% of total market share.

Market Valuation Remains Uncertain; Bulls and Skeptics Weigh In 

Despite Coinbase’s incredible first quarter results, analysts and investors alike have been split on the crypto exchange’s valuation. According to FTX’ Coinbase “pre-IPO contract” — which is currently at $527 — investor sentiment seems to have placed Coinbase’s valuation at a generous $137 billion. 

Pre-listing contract value of Coinbase (CBSE/USD) on Tradingview.com

Analysts at Investment bank DA Davidson raised Coinbase’s price target by 125% following its blowout quarter. Reiterating a buy rating, Davidson gave the crypto exchange a 20x forward price to sales ratio, which would equate to approximately $90 billion in market capitalization given total shares outstanding. 

On the other hand, research firm New Constructs stated that the crypto exchange’s valuation should be closer to $18.9 billion. Their reasoning for the significantly lower valuation was primarily due to declining industry-wide transaction margins. With more exchanges competing for users, it’s a race to the bottom for the lowest possible fees.

In a research note, New Constructs CEO asserted that Coinbase had “little-to-no-chance of meeting the future profit expectations that are baked into its ridiculously high expected valuation.”

While that may be true, many recent IPOs and growth stocks at large have commanded exorbitantly high valuations compared to earnings. As a reference point, Bitcoin holders Square ($SQ) and Tesla ($TSLA) trade at price-to-equity ratios of 594 and 1057, respectively.

These companies often trade at higher premiums because its future earnings growth is accordingly priced in. When considering the incredible potential upside of the crypto industry, Coinbase’s $100 billion valuation appears to be fairly justifiable. 

Nonetheless, $COIN will become available to trade on the Nasdaq exchange in four days.

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Source: Bitcoinist News

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Crypto News Updates

Bitcoin Investment Firm NYDIG Raises Additional $100 Million

Crypto investment provider NYDIG raised an additional $100 million in growth capital earlier this week. The new funding round featured MassMutual, Stone Ridge Holdings, New York Life, and Liberty Mutual Insurance, among others as strategic partners. This follows the investment firm’s $200 million cash injection back in early March. 

In the previous funding round, Robert Gutmann, CEO of NYDIG, stated that the additional funds would be used to develop “Bitcoin-related strategic initiatives spanning from investment management, insurance, banking, clean energy, and philanthropy.” With recent funding and strategic hires, Gutmann promised to deliver an “explosion of innovation in Bitcoin products and services.”

How Potential Inflation has led to NYDIG’s Growth 

Ross Stevens, CEO of Stone Ridge and Executive Chairman of NYDIG, continued, “Fiat depreciation causes inflation in fiat premiums, while collapsing the purchasing power of claims. We see a brighter bitcoin-powered future for the billions who depend on the insurance industry every year.” More simply put, high inflation erodes the current value of fixed-rate future payments — which is an obvious detriment of insurance companies. Using Bitcoin over fiat, insurers can indirectly “hedge” against inflation. 

Growing institutional demand for cryptocurrencies has led to NYDIG nearing $6 billion in assets under management. The firm partnered with Morgan Stanley’s private wealth management arm to offer Bitcoin investments to wealthy clients. 

The New-York based firm also announced that Mike Sapnar, CEO of major insurance company TransRe, would join the company as the global head of insurance solutions, assisting the firm in paving the way for “Bitcoin-driven innovation” in the property and casualty industry. 

“With the addition of Mike Sapnar, a trusted partner for years, and now with Starr, Liberty Mutual, New York Life, and MassMutual as shareholders of NYDIG, we will be working tirelessly to enable new Bitcoin-denominated products for global insureds,” Stevens said.

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Source: Bitcoinist News

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Bitcoin Miner Riot Blockchain Invests $780 Million to Expand Operations 

Bitcoin mining firm Riot Blockchain announced its milestone purchase of $138.5 million in mining equipment this Wednesday. In a statement, the company announced that it will be purchasing 42,000 units of Bitmain’s Antminer S19J for $3,300 per unit. The standard hash rate of the model is 90 TH/s — meaning that Riot would be paying approximately $36 per TH/s of computing power. 

The global chip shortage and rising demand for crypto mining have led mining equipment to command exorbitant premiums. Research from the Block showed that the newest generation of Bitcoin mining equipment now cost five times more than its pre-order prices only months prior.

It’s also important to note that Bitcoin Hash Rates have been on the rise, hitting a new all-time high earlier this week. Despite rising equipment costs, miners have continued to retain profit margins upwards of 85%, according to Ethan Vera, CTO of mining firm Luxor. As a result, Riot has continued to aggressively invest to grow their operations.

Riot initially signed a deal with Bitmain in last August to invest $17.7 million in 8,000 units of Bitmain’s Antminer S19 Pro — scheduled to be fully delivered by this month. As for the recently ordered 42,000 units, delivery is not expected to start until next year. Riot stated that it would receive 3,500 units every month starting in November, with deliveries continuing up until October 2022. 

Riot Acquires Texas-based Bitcoin Mining Facility Whinstone for $651 Million 

As part of their recent expansion, Riot Blockchain also acquired Whinstone, one of the United State’s largest crypto mining facilities. This acquisition is likely an effort to accommodate the 42,000 newly purchased mining rigs. Per Bloomberg, Riot will purchase all of Whinstone’s current assets and operations for $80 million in cash plus a fixed 11.8 million shares of Riot common stock.

Riot shares (NASDAQ: RIOT) traded at $49.55 into Thursday’s market close — rising 2.44% from recent catalysts. 

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Source: Bitcoinist News

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Crypto News Updates

Grayscale Bitcoin Trust to Convert to an ETF, Premium Remains Negative: What’s Next?

Earlier this Monday, Grayscale Investments announced its plans to transform Grayscale Bitcoin Trust (GBTC) into an exchange-traded fund. Up until recently, GBTC was one of the only investment funds for institutions and retail investors alike. Amidst growing competition, however, the fund’s high management fees and stringent lock-up periods lost favor with many investors. Since February, GBTC had continued to trade at a negative premium — meaning that the fund was trading below the price of Bitcoin. 

In late 2020, GBTC premium shot up to as high as 50% thanks to a surge in institutional demand for Bitcoin. The premium sunk to an all-time low of -14.34% earlier last month. This significant decline was likely the wake-up call Grayscale needed to turn its increasingly outdated investment product around. In a blog post, the investment firm stated that it was “100% committed” to converting its Bitcoin fund into an ETF.

“Today, we remain committed to converting GBTC into an ETF although the timing will be driven by the regulatory environment. When GBTC converts to an ETF, shareholders of publicly-traded GBTC shares will not need to take action and the management fee will be reduced accordingly.”

According to Grayscale, the firm had applied for a Bitcoin ETF with the Securities and Exchange Commission (SEC) back in 2016 and 2017. “[T]he regulatory environment for digital assets had not advanced to the point where such a product could successfully be brought to market,” Grayscale said. They were likely right, as back then, Bitcoin’s institutional interest was sparse at best. However, with Canada approving Bitcoin ETFs earlier this year and the likes of Fidelity recently joining the race, the time seems ripe for Grayscale to finally revamp GBTC. 

Why Grayscale Bitcoin Trust’s Premium Remains in Downtrend

Following the announcement on Monday, GBTC shares rallied 5% as premium bounced from -9.32% to -3.78% — perhaps indicating a renewed confidence from institutional investors. However, the premium plummeted back down to -8.35% on Tuesday. Institutions may have closed their highly-levered positions at the top, as their 6-month lock-up periods ended. 

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Source: Bitcoinist News

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Kimchi Premium Soars 17% as South Korea’s Crypto Market Turns Bullish

Since March’s extreme volatility, Bitcoin price action has been far more stable. The major cryptocurrency has continued to hover around the $57,000 to $58,000 price level, seeing minimal fluctuations with the Bitcoin Volatility Index sitting at 3.21%. 

In South Korea, however, the resurgence of the local crypto scene and tightening regulations have led Bitcoin prices to surge to 77,661,000 won, or 69,300 dollars on Bithumb. Bitcoin’s current all-time high is $61,500 — which is nearly 12% less than current prices in South Korea. If you were to buy Bitcoin from Bithumb at current prices, you would have to pay $11,000 more per coin. Why is this?

Bitcoin (BTC) / South Korean Won on Bithumb. Source: Tradingview.com

Kimchi Premium Soars with Renewed Local Demand 

Enter Kimchi Premium. The Kimchi Premium, which is currently at 16.83%, represents the spread in Bitcoin price between South Korean exchanges and global exchanges. There are several reasons for the Kimchi Premium being so high. First of all, it’s important to note that the South Korean government has heavily regulated the crypto industry as of recent.

For instance, crypto exchanges like Bithumb are banned from servicing foreigners, and the nation’s newly enacted anti-money laundering laws limit significant capital outflow. Moreover, Korean citizens can’t purchase Bitcoin at lower prices on global exchanges because those exchanges do not support Korean won. As a result, the liquidity and demand on South Korean exchanges are organic and locally driven; the rising premium suggests that, despite the regulations, Bitcoin is once again gaining traction in South Korea. 

What’s Next for the South Korean Crypto Industry? 

Will Kimchi Premium continue to skyrocket or level off? And more importantly, will this lead to the resurgence in Korea’s crypto markets? Due to the flurry of regulations, South Korea’s crypto market has cooled down substantially in the past several years. Global exchanges OKEx and Binance recently gave up on Korea, citing low trading volume and dwindling user base — causing Kimchi Premium to plummet to -6% in February.

South Korea’s strengthening market conditions and Bitcoin’s increasingly bullish narrative point to a revitalization of its crypto industry. However, the uncertainty surrounding the country’s regulatory environment may pose further risks ahead. 

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Source: Bitcoinist News

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Bank of Japan Set to Begin Experimenting with CBDC 

Earlier today, the Bank of Japan (BOJ) announced that it began experimenting with the possibility of issuing its own central-bank digital currency (CBDC). The central bank first  entertained the idea of a CBDC back in February. 

Now, the decision to ramp up their timeline coincides with other nations making strides in creating their own digital currency. China recently laid out its plans to create a digitized Yuan, with several pilot programs already under its belt. In March, the Eastern Carribean Central Bank also officially launched its digital currency.

BOJ to Conduct First Phase of Experiments This Spring

In a statement, the BOJ stated that its first phase of experiments will be carried out until at least March 2022 — focusing on the technical feasibility of issuing, distributing and redeeming its CBDC. Once that is complete, the central bank will transition to the second phase of its experiments, hammering out the detailed functions and payment infrastructure. 

BOJ Executive Director Shinichi Uchida stated that the central bank will likely launch regional pilot programs that involve payment service providers and end users. “While there is no change in the BOJ’s stance it currently has no plan to issue CBDC, we believe initiating experiments at this stage is a necessary step,” he said.

Cash Usage in Downtrend, Central Banks look to Adapt 

The creation of a centralized digital currency has been a topic of interest for many central banks around the world. With the coronavirus pandemic and new fintech innovations flooding the market, global cash payments dropped approximately 4-5% in 2020, according to Mckinsey. As cash usage dwindles and decentralized digital currencies become mainstream, adoption of a state-backed digital currency almost seems like a necessity in the near future.

In February, U.S. Federal Reserve Chair Jerome Powell announced that the U.S. central bank was intent on creating its own CBDC to bolster its government payment systems. Following his statement, the Federal Reserve released a new document that discussed the broad objectives and preconditions for a general-purpose central CBDC. China, on the other hand, had already begun testing its digital currency by distributing over $1.5 million in Yuan to citizens.

While China leads the pack with the US not far behind, the Bank of Japan’s ambitious timeline has put the nation at the forefront of the CBDC movement. 

US Dollar (USD) / Japanese Yen (JPY) Source: Tradingview.com
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Source: Bitcoinist News

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MicroStrategy Acquires An Additional $15 Million in Bitcoin 

Microstrategy announced today that it purchased $15 million worth of Bitcoin. The company’s CEO, Michael Saylor, tweeted this morning that his company had bought approximately 253 BTC, bringing its total holdings to about 91,579 BTC. In his tweet, Saylor said that the company’s latest buy was at an average cost of $59,339 per Bitcoin, which is about $1,600 below the cryptocurrency’s all-time high. 

With Bitcoin prices hovering around the $59,000 mark at the time of writing, Microstrategy’s current holdings amount to more than $52 billion dollars. Since his company’s first Bitcoin purchase last August, Saylor has remained incredibly bullish on his bet. When Microstrategy’s $550 million cash reserve ran dry from purchasing Bitcoin, he raised a $650 million corporate bond to buy even more. This February, the company raised another $1.05 billion in a bonds-for-Bitcoin offering. 

Saylor Remains Incredibly Bullish on Bitcoin 

With ultra-low corporate interest rates, Saylor has stated that he would prefer to issue debt now to buy Bitcoin. It’s also been disclosed that he has a personal holding worth more than $1 billion dollars.

“The Company remains focused on our two corporate strategies of growing our enterprise analytics software business and acquiring and holding bitcoin,” said Saylor. “[We] now hold over 90,000 bitcoins, reaffirming our belief that bitcoin, as the world’s most widely-adopted cryptocurrency, can serve as a dependable store of value. We will continue to pursue our strategy of acquiring bitcoin with excess cash and we may from time to time, subject to market conditions, issue debt or equity securities in capital raising transactions with the objective of using the proceeds to purchase additional bitcoin.”

Microstrategy Shares Recover from Recent Tech Correction 

Following a near 50% decline in stock price from recent highs, MicroStrategy’s stock has reversed from its downtrend alongside the NASDAQ Composite. Its shares traded at $720.55 today into market close. 

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Source: Bitcoinist News

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Fei Protocol Launches Its StableCoin Project, Locking Up $1 Billion ETH

Earlier this Saturday, FEI Protocol held its Genesis event, successfully raising over 639,000 Ether — approximately $1.3 billion — in commitment for its stablecoin. The Ethereum raised for the project will be used as collateral to mint its stablecoins, which uses bonding curves to maintain a peg of $1. FEI’s protocol mechanism also allows for direct incentives, which is “more capital efficient, has a fair distribution, and fully decentralized.” According to the project, over 17,000 addresses participated in the event, providing $2.6 billion in liquidity to Uniswap. 

Potential Controversy for FEI’s Mechanism?

However, the project has already received criticism for its mechanisms. FEI’s use of protocol controlled value (PCV) means that, when users deposit collateral, their funds cannot be immediately pulled out. This is because the capital is owned and managed by the protocol itself — making it more capital efficient and decentralized compared to other stablecoins. 

The project initially allowed participating users to mint FEI at $0.50 — a seemingly massive discount from the $1 peg. As the Ethereum bonding curve would grow based on supply, many users anticipated that the stablecoin would reach its peg once enough collateral was deposited. 

However, liquidity providers and short-term investors found themselves unable to sell their FEI for ETH without incurring massive losses on the trade. This was because of the protocol’s direct incentive system which used a dynamic burning system to return the stablecoin’s price to peg. According to the protocol’s white paper, selling “FEI in a quick time frame during a period of high sell pressure” would lead to the user “incur[ring] a significant burn penalty.” 

Through a Twitter post, Messari research analyst Ryan Watkins shared his thoughts on the matter: “The issue with FEI right now is most people want to sell it back for ETH, but doing so incurs extreme penalties. Eventually, FEI will re-weight to bring [itself] back to its peg, but then what? There’s little real demand for FEI and most are still running for the exits.”

Source: Bitcoinist News