As in 1933, is there a threat to Bitcoin in the 2020s?
In 1933, the US banned the hoarding of gold and ordered US citizens to deliver their gold to the Fed. Is there a similar threat to Bitcoin in the 2020s? This is the question Simon Chandler tried to answer in an article on Cryptonews.com
“A sharp global recession seems to be inevitable. Could the US or any other government shut down crypto exchanges or ban the ownership of cryptoasset? At first glance”, the author writes, “this seems like an extreme and unlikely scenario. However, figures within the crypto industry believe that it could become a real possibility if, in the US case, the dollar suffers severe inflation during a long recession. By closing exchanges and custodian services, the US government would attempt to limit the number of people exchanging increasingly devalued dollar for bitcoin and other coins.
However, while there’s an outside chance that the government might move to close exchanges and ban the ownership of crypto, it’s unlikely that any such move would be effective in stopping Americans from holding and trading crypto. That is, so long as they moved their coins off any US-based third-party platforms before the government swooped in. In theory, the same scenario would play out in other countries too.
Speaking to Cryptonews.com, CryptoMondays partner Lou Kerner agrees that the need to limit the impact of crypto hoarding on fiat monetary systems might impel the US government (and possibly other governments) to close down exchanges or even seize crypto.
“The most popular reason used by governments is to ban the use of cryptocurrencies and the services that support their use is illicit activity,” he says. “But it’s broadly believed that governments are most concerned about the impact it could have on their own monetary system if citizens had choice.”
Indeed, other governments have taken harsh restrictive measures against crypto for reasons related to capital controls. Most notoriously, the Chinese government banned crypto exchanges (not BTC) in 2017, largely due to fears over capital flight (i.e. people sending or trading money overseas).
So it’s certainly not inconceivable that other governments – including the US government – could take similar steps if the coronavirus pandemic triggered recession results in a deep depression and high USD inflation. While hyperinflation is not likely in the US, some estimate that the USD may devalue in the next 12 months.”
Bitcoin & Bitcoin Cash holders are richer than Ethereum & Litecoin ones
Fredrik Vold (Cryptonews.com) wrote about the profitability of cryptocurrencies in the last trading week, judging from a blockchain analysis tool that works across a range of digital assets. “The majority of holders of both bitcoin and bitcoin cash seem to be still “making money”, wrote the author, while Ethereum and litecoin holders “are not so lucky”.
“The new set of tools, developed by blockchain analytics firm Into The Block and recently added to the crypto market data provider Coinpaprika, provides several insights, ranging from things like what percentage of holders that have made money, to the share of holders that are defined as “whales” and the composition of holders by time held.
As defined by IntoTheBlock, holders that have a positive difference between purchase price and current price are defined as being “in the money.” In the case where there is no difference, the holder is said to be “at the money,” while holders at a loss are “out of the money”, the author concluded.
Traditional traders ready to go crypto, prefer Bitcoin, survey shows
Tim Alper (Cryptonews.com) reported the findings based on a survey of 86 senior executives across the sellside, proprietary trading firms and the buyside. The main conclusion is that these executives “believe that larger trading companies are about to take the crypto plunge, and could be set to provide the market with a timely boost. BTCUSD is the most preferred trading pair.”
The survey Institutional Adoption of Digital Asset Trading, made by the Acuiti management intelligence platform, with the CME Group and Bitstamp, “suggests the digital assets market is on the cusp of significant growth from traditional trading firms.”
The authors stated that its respondents from non-bank Futures Commission Merchants, proprietary trading firms and the buyside “tended to be C-suite [the executive-level managers],” while banking and brokerage respondents were primarily “heads of function at managing director level.” The findings were announced this week. However, the authors did not specify whether the survey was conducted before or after the market crash in March.
In either case, according to the survey, although most “traditional trading firms” still refuse to handle crypto, the tide could be about to turn.
The authors wrote, “97% [of trading firms] will consider the opportunity again in the next two years or less and 45% are planning to revisit the idea in six months or less” and concluded that “the precursor to expansion is likely to be the catch-up of regulatory frameworks in the United States and the EU to encompass digital asset exchanges and create more regulated markets.”
The executives also said that when it came to selecting which cryptocurrency or stablecoin to trade in, the respondents’ primary consideration was liquidity, followed by volatility and arbitrage opportunities.
The authors concluded that “surprisingly, [the] arbitrage opportunities [criterion] was driven into the top three purely by traditional trading firms but not from crypto trading firms. This is linked with the priority of speed and performance for traditional trading firms, suggesting a different trading dynamic from crypto trading firms.”