Satoshi’s Holiday Gift

A summary of the facts around the possible international cyber war that’s going on as we write and of course an overview the last two weeks in the cryptocurrency markets as Bitcoin hit all time highs

With Bitcoin’s price breaking out to all time highs (congrats!) after two weeks of ranging between 16,000 and 19,000, the derivatives markets keep expanding, with record open interest in Bitcoin contracts reaching $8.2 B (seen below). Trading volumes were not as extreme during this breakout.

Below on the right: BYBT reported $1.2 Billion in short liquidation over the last 2 days, sending pessimistic bets into large losses.

After the US regulated CME futures briefly topped the exchanges volume list, Malta based OKEX is currently leading reported trading activity, with $1.5 B traded over the last day.

The view that buying is led by institutions and wealthy buyers is supported by data like the GBTC premium, as well as the number of ‘whale’ addresses. The GBTC premium to BTC is created by the demand of retail buyers, mostly in the US. Though 30% is a high premium to pay, the chart shows this has been in-line with recent months. The premium of shares in Grayscale’s coins was much more excessive during retail crazes in 2017 and 2013.

This is despite record inflows to digital asset funds. Coinshares in their first Digital asset funds flow weekly report estimated that $429 million was added only last week to cryptocurrency investment funds (such as GrayScale, 21shares and Coinshares). They now hold assets worth a record $15 B, representing 2.6% of today’s total market cap of all cryptocurrencies ($570 billion).

According to Arcane Research, due to Bitcoin’s magnificent rise over the past months its correlation with S&P500 is the lowest it has been since the March crash, and correlation with gold has been dropping as well. Meanwhile charting site TradingView said to Coindesk that “BTCUSD has consistently been the most popularly viewed symbol this year”, disclosing that it has been viewed millions of time in 2020. Efficient Frontier’s Director of Financial Services Adi Yona noted that it will be interesting to watch cryptocurrency markets going into the end of the year and during the first week of January, as some financial companies like to temporarily sell all their liquid assets due to the simplicity of reporting cash. Also, end-of-year selling for tax purposes is, according to financial markets veteran TRI’s Brian Beamish, expected to be increased this year due to concern of capital gains tax increases in 2021.

It was a challenge to handle the amount of positivenewscomingout this week for our industry. Listing the new names investing or endorsing Bitcoin and crypto is getting tootimeconsuming. So we’ll start monitoring only the volume of these declarations. Right now they’re increasing weekly, three years ‘late’.

Is the USA in a cyber war?

Unlike a hot war, a ‘cyber war’ has never been officially acknowledged. We can only speculate about one’s existence when an extraordinary amount of computer hacking attacks are publicly exposed. Last Sunday Reuters broke the story of the US Treasury Department being hacked, among other government agencies. “The hack is so serious it led to a National Security Council meeting at the White House on Saturday” Reuters news reported. The agency wide hack was discovered after cybersecurity firm FireEye discovered their ‘vault of sophisticated and secret hacking tools’ was stolen by ‘nation state level’ hackers. This news subsequently led to discovering the trojan horse planted in SolarWind’s software. Among the clients of this network-management giant are the Pentagon and the White House. Another unnamed source informed Reuters that the hackers are “highly sophisticated” and have been able to trick the Microsoft platform’s authentication controls as well. Further reports exposed that the hackers were also able to fake authentication tokens for Microsoft accounts.

The next day, Google, the all-seeing American internet and technology corporation, suffered a rare, major world-wide outage to services, later explaining it was due to a computer memory capacity issue. On Wednesday, while Bitcoin broke record prices, popular Russian messenger, Telegram also suffered an outage, while Microsoft Outlook also suffered a “glitch”, preventing users from signing in to its email service. These incidents follow November 30th AWS’s “major outage”, and Microsoft Azure login failure on September 29th.

It’s left for us to speculate if there is a connection between these events, or if perhaps they’re all due to chance. Another explanation could be increased overloads and bugs created by the growing internet use and the work-from-home environment of 2020. In any case, it does seem like a lot may be going on behind the scenes worldwide. It’s hard to guess how these issues will affect our industry in the future, but perhaps it’s worth keeping extra backups of our blockchain for the time being.

News & links

  1. CME group announces Ethereum futures, if approved, will go live in February 2020

  2. Binance to earn in 2020 close to $1 Billion from trading fees

  3. Bitcoin mining machines sold out/delayed. Secondary markets price rise

  4. Coinbase files for IPO after BitPay, Paxos and Anchorage apply for US banking license

  5. DeFi interest rate swap app raises $1.1 M. Bittrex crypto exchange adds tokenized tech stocks

  6. South Americans find Bitcoin remittance increasingly useful after Western Union cuts off Cuba

  7. Ukranian parliament member comes out as Monero whale

  8. Bitcoin tech: Kraken announces Lightning integration, first Multicoin Swap happens

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