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Inflation games: Bitcoin competes with fiat on value but lacks volume

Amid global economic contraction, Bitcoin appears to be gaining momentum against struggling fiat currencies….



Bitcoin being regarded as “sound money” is a common refrain among many proponents of the popular cryptocurrency. With a finite supply of 21 million and a network secured by over 120 exahashes per second of computing power, the consensus among industry commentators has often leaned toward it becoming a global monetary superpower.

Barely a decade into its existence, Bitcoin’s inferred value is already the 11th-largest global monetary base. Earlier in November, Bitcoin became larger than the Russian ruble for the first time in history.

While fiat currencies buckle under economic strain exacerbated by the coronavirus pandemic, Bitcoin (BTC) has continued on its upward trajectory for most of 2020. Even though the price fluctuations are much more volatile, BTC is up about 120% year-to-date despite the Black Thursday event, a substantial decline suffered back in mid-March.

With economic recovery plans likely involving considerable stimulus packages, such cash injections are expected to cause significant devaluation in fiat currency values. If Bitcoin follows through on the parabolic advance predicted by numerous market analysts, it stands ready to move even higher up the global monetary base log.

The entire record of world reserve currency history remains consistent with the fact that monetary bases rise and fall. In the six monetary epochs since 1450, no currency has maintained global dominance for more than 110 years. With the U.S. dollar standing at 95 years of being the world’s reserve currency, some are hoping this is a sign that things may change soon.

Despite being the most gold-backed fiat currency in the global market, the Russian ruble now has a lower monetary base than Bitcoin. With the ruble losing further ground to the U.S. dollar and BTC jumping to the $16,000 mark, 1 BTC now equals 1.2 million rubles. Up next for Bitcoin in its assault of major currencies is the Canadian dollar. Based on its current circulating supply, a move above $18,000 for BTC would see it overtaking the CAD.

As previously reported, Bitcoin is already at all-time highs against seven national currencies including those of Brazil, Argentina and Turkey. Rising inflation exacerbated by economic stagnation occasioned by COVID-19 has negatively impacted several fiat currencies.

For now, Bitcoin’s all-time high remains the $19,665 attained during the December 2017 bull run. However, for Bitcoin to begin to challenge the premier global currencies like the U.S. dollar, Chinese yuan and Japanese yen, it will need to reach a six-figure price, according to John Todaro, research head at institutional trading platform TradeBlock, who told Cointelegraph:

The parabolic advance required to propel Bitcoin to such heights would also place BTC firmly in the same category as gold — as a bonafide store of asset value. Several proponents of the popular cryptocurrency already identify BTC as a suitable hedge against monetary debasement and other forms of economic uncertainty.

Amid interest rate cuts back in 2019, Travis Kling, founder and chief investment officer of Ikigai Asset Management, warned that the prevailing debt situation at the time was a recipe for another global financial crisis. According to Kling, central banks were propping up growth metrics to portray the impression of a healthy economy. When Kling made these comments, the world was yet untouched by the coronavirus pandemic.

Bitcoin featured frequently in the discussions around possible safe-haven assets that could be used as a hedge against another global recession. Amid the COVID-19 panic of selling off assets, BTC did not escape the massive liquidation of Black Thursday, proving that it has not yet achieved that coveted status. The largest crypto by market capitalization crashed by almost 50%, bottoming out at about $3,800. However, in exactly eight months since then, BTC’s price is up over 300%.

Commenting on the possibility of Bitcoin reaching a new all-time high in the short term, Todaro remarked that it will be tough to establish a sustained push toward the record before the end of 2020, adding further: “This bull cycle should bring us well beyond prior ATHs on a longer-term basis and with government spending increasing and the May halving behind us, we are set up for one of the most attractive bullish periods in Bitcoin’s history.”

Joe DiPasquale, the CEO of crypto hedge fund BitBull Capital, also sees Bitcoin setting a new all-time high during this current bull run, telling Cointelegraph: “It is very likely [that Bitcoin reaches a new all-time high] since Bitcoin has now crossed $16,000, which was a key resistance level. $20,000 is not that far off from this point unless any major negative developments impact the market in the short-term.”

While inflation remains a real concern for many countries, 2020 has been a pivotal year for Bitcoin in terms of supply dynamics. The May halving event saw the supply of new Bitcoin cut by half.

Meanwhile, several governments in response to the economic strain induced by COVID-19 adopted proactive monetary policies including stimulus cash injections. According to World Bank estimates, global gross domestic product is expected to decrease by 5.2% in 2020 — the largest contraction in decades. Back in June, the World Bank outlined a roadmap for countries to navigate the economic problems, stating:

Recognizing the declining value of cash holdings, some companies are already pivoting to Bitcoin as a treasury reserve asset. Nasdaq-listed MicroStrategy made headlines back in August when it announced the acquisition of 21,454 BTC — valued at $250 million at the time. More interest from big traditional institutions followed soon as they sought to buy into Bitcoin as a means of reserve.

Related: The next big treasure: Corporations buy up Bitcoin as a treasury reserve

The business intelligence firm doubled down on its Bitcoin adoption policy with an additional 16,796-BTC ($175 million) purchase in September. In less than two months, the company has seen the value of its BTC holdings grow by over $160 million. Similar things could be said of other non-crypto native companies that bought up BTC as a reserve.

While Bitcoin retains certain characteristics pertaining to currencies, the lack of supply caps for fiat makes any attempts to draw comparisons between both somewhat problematic. If so, perhaps market capitalization makes for a better parameter in gauging Bitcoin’s growth vis-à-vis the size of other major asset bases, as DiPasquale stated:

In a speech delivered on Nov. 6, Jerome Powell, chairman of the U.S. Federal Reserve, downplayed expectation of a swift recovery from the current economic contraction: “The current economic downturn is the most severe in our lifetime. It will take a while to get back to the levels of economic activity and employment that prevailed at the beginning of this year.”

Powell’s remarks echo similar warnings from the World Bank and other financial establishments. Indeed, the overwhelming consensus is that the confluence of global, regional and national economic constraints exacerbated by COVID-19 will be difficult to overturn in the short to medium term.

Pharmaceutical giant Pfizer recently announced that its COVID-19 vaccine was over 90% effective in preventing the virus. While the development constitutes a bit of good news in the fight against the pandemic, market analysts say the economy is destined for a downward path regardless of a vaccine.

Todaro believes that “equity markets are pricing in the COVID-19 vaccine as a savior to industrials and in-person retail companies.” However, he did add that good news alone will not kickstart economic recovery as supply and demand dynamics will need to be reestablished. Furthermore, according to Todaro, various established firms are in dire financial situations, and without additional relief by governments, they are likely to go bankrupt: “This uncertainty is starting to come back some now, with equities markets seeing a pullback.”

With more pain ahead, Bitcoin appears primed to receive even greater institutional attention as big-money players look for alternative investment vehicles. Indeed, the flow of smart money into Bitcoin already has some stakeholders predicting that BTC will challenge gold as the de facto hedge asset of choice for institutional investors.



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Massachusetts regulator seeks to revoke Robinhood’s broker-dealer license

Massachusetts’ securities regulator is seeking to revoke the broker-dealer license of cryptocurrency-friendly stock trading app Robinhood in the state.



State regulators claim that Robinhood has targeted inexperienced investors.

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Massachusetts regulator seeks to revoke Robinhood's broker-dealer license

Massachusetts’ securities regulator is seeking to revoke the broker-dealer license of cryptocurrency-friendly stock trading app Robinhood in the state.

William Galvin, the head of the state’s securities division, said in a new administrative complaint that Robinhood has “continued a pattern of aggressively inducing and enticing trading among its customers — including Massachusetts customers with little or no investment experience,” Bloomberg reports Thursday.

The new filing is a follow-up to a complaint filed by Galvin’s office in December 2020, alleging that Robinhood’s marketing illegally targeted inexperienced investors.

The state pointed to Robinhood’s recent activity, including a promotion that provides customers with cash rewards based on new deposits, as proof of a “firm culture which has not changed.”

Robinhood responded to the new complaint, arguing that the action could prevent “millions of Bay Staters” from accessing their platform. In December, the company said that its platform had nearly 500,000 customers in Massachusetts.

The firm has filed a lawsuit seeking to invalidate a recently adopted fiduciary rule in Massachusetts that state regulators have accused it of violating. Adopted in 2020, the rule requires broker-dealers to act in their clients’ best interest.

“The Massachusetts Securities Division’s new Fiduciary Rule exceeds its authority under both Massachusetts state law and federal law,” Robinhood said. “Robinhood is a ‘self-directed’ brokerage firm that does not make investment recommendations or provide investment advice. By its own terms, the new rule does not apply to self-directed firms,” the firm noted in the lawsuit.

Robinhood has faced mounting pressure from regulators and users alike after it became involved in the controversial GameStop stop short-squeeze. Robinhood halted buying for GameStop stock in January 2021, drawing the ire of the trading community.

Last year, 20-year-old Robinhood user Alex Kearns committed suicide after seeing a $730,000 negative balance on his Robinhood app. A note on his computer reportedly posed the question, “How was a 20 year old with no income able to get assigned almost a million dollars worth of leverage?” In February 2021, Kearns’ parents filed a lawsuit against Robinhood over his death.

Robinhood has been also experiencing a number of technical issues, reportedly causing major losses for traders and triggering further legal action against the company.

The most recent such event occurred on Thursday when Robinhood’s crypto trading platform ran into technical issues as Dogecoin (DOGE) hit a new all-time high of $0.27.



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Binance Coin reaches 37% of Ethereum’s market cap: 3 reasons why BNB is soaring

Binance Coin (BNB), the native cryptocurrency of Binance Smart Chain, has been rallying after seeing an uptick in transaction volume.



Binance Coin, the native cryptocurrency of Binance Smart Chain, has been surging with a massive uptick in transaction volume.

Binance Coin reaches 37% of Ethereum’s market cap: 3 reasons why BNB is soaring

Binance Coin (BNB), the native cryptocurrency of Binance Smart Chain and top digital asset exchange Binance, is starting to close in on Ethereum (ETH) in market capitalization.

As of April 12, BNB is valued at $87 billion at the price of just under $600. The valuation of Ethereum is hovering at around $246 billion, which is 2.8 fold larger than that of Binance Coin.

— Joe Grech (@JoeBGrech) April 12, 2021

The technical momentum of BNB has been so strong that it briefly surpassed the volume of the BTC/USDT pair on Binance.

This trend is significant because USDT is the biggest stablecoin in the global market and the BTC/USDT pair is one of the most liquid trading pairs in crypto.

Why is Binance Coin surging so hard?

Binance Coin has been rising due to the three key reasons: an overall uptick in the popularity of Binance Smart Chain, strong technical momentum, and the gap between BSC and Ethereum projects.

Binance Smart Chain transaction volume. Source:

In recent weeks, the transaction volume on Binance Smart Chain has tripled the volume of the Ethereum blockchain.

Particularly in Southeast Asia, the usage of Binance Smart Chain has been rising, according to Coin98, the biggest venture capital firm in Vietnam that is building a DeFi ecosystem targeted at Asia.

Considering that the price of BNB was much lower than Ethereum until late March, this discrepancy between BNB and ETH likely made BNB a compelling trade.

There is also a big gap in valuations between the Ethereum DeFi ecosystem and Binance Smart Chain, which has been fueling a large portion of the demand for BSC projects.

This has caused the value of BNB to rapidly rise over the past two weeks while ETH has been relatively stable at just over $2,000.

A journalist who covers crypto in China known as “Wu Blockchain” explained:

“BNB broke through an astonishing $600, but Ethereum’s Fees fell to its lowest point in a month. Although the transaction volume of BSC is 3x that of Ethereum, the two are not in a competitive relationship. The top 10 addresses of BNB hold more than 88%, and Eth is 20%. The future of Ethereum depends on the upgrade of EIP-1559 and 2.0. The only two things Binance needs to worry about are the government suppression and hackers.”

Traders foresee BNB to undergo a more explosive rally in the foreseeable future if it breaks out against Bitcoin.

Kaleo, a pseudonymous cryptocurrency trader, said:

“$BNB breaking above this level on the $BTC pair could lead to the type of explosive momentum needed to actually close in on $1,000.”BSC/BTC 1-day price chart (Binance). Source:, KaleoWill the capital rotate back into Ethereum?

However, Kelvin Koh, the managing partner at Spartan Group, one of the largest DeFi-focused funds in Asia, said that for now, he expects the capital to rotate back into Ethereum as BSC projects near the valuation of ETH equivalents.

He emphasized that there is a huge valuation gap between BSC and ETH projects. This gap could be making BSC projects compelling to the market. He said:

“BSC is having its own DeFi summer….so much alpha to be discovered in BSC ($XVS, $CAKE). If you are wondering why Ethereum DeFi coins are lacklustre, its because of the huge valuation gap that still exists between the BSC coins and ETH equivalents. Until this gap closes, money isn’t rotating back to ETH DeFi coins.”



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Our Man in Shanghai: Scandal as $45M of stolen government funds lost using 100X leverage

A blockchain security company’s future is in doubt after its CMO allegedly lost $45M betting on Bitcoin; Chinese netizens turn the other cheek to Peter Thiel’s warnings, and more



The Chief Marketing Officer a blockchain security company has been charged with embezzlement; Peter Thiel calls Bitcoin a ‘weapon’ of China (but no one cares), and CZ’s net worth rises to $1.9 billion.

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Our Man in Shanghai: Scandal as $45M of stolen government funds lost using 100X leverage

Blockchain security company Beosin has been the focus of a major scandal after its Chief Marketing Officer Gao Ziyang was taken into custody and charged with embezzlement of state-owned assets. He is alleged to have been using government funds to unsuccessfully short BTC, resulting in a massive liquidation of over 300 million renminbi, or $45 million dollars.

Beosin, also known as Lianan Tech, had a working relationship with Chinese authorities and was helping them investigate fraudulent fundraising schemes. After the seizure of funds back in 2020, Beosin was tasked with storing and selling the assets, to be later returned to the state treasury. Instead of selling the assets, CMO Gao Ziyang allegedly opened a short position in late August, hoping to increase the size of the positions for personal gain. At the time, BTC was trading around $12,000.

Authorities say that records obtained from OKEx show the position began using 10x leverage, before increasing to 100x, and eventually ended up in liquidation. They began to ask about the whereabouts of the funds, before finally realizing that the assets were no longer in the wallet. Online, people have marveled at the age of Gao Ziyang, who was described as in his twenties. The future of Beosin, which was once regarded as a credible blockchain security company in China, is now in serious doubt.

Peter Thiel’s Bitcoin claims ignored

On Wednesday, PayPal co-founder and venture capitalist, Peter Thiel warned that the Chinese government may be using Bitcoin as a “financial weapon” to undermine the stability of the U.S. Dollar. The reaction was quite muted, as only 30 comments responded to the story on Sina Finance, a social media account with over 23 million followers. One of the top comments simply pointed out that “Bitcoin wasn’t invented by China” while another comment simply stated “Impossible”.

Binance billionaire

On Thursday, Binance founder Zhao Changpeng, better known as CZ, appeared as #1664 on Forbes’s annual billionaire list. His net worth is now listed at $1.9 billion, an increase of $700 million from the last list in 2020.

Nanjing Ribensi bought by US company

US Company Future FinTech announced earlier this week that they had agreed to a deal to acquire China-based mining company Nanjing Ribensi Electronic Technology Co. Nanjing Ribensi operates a mining farm that can handle up to 30,000 Bitcoin mining machines. The deal was worth approximately $9.1 million dollars and stipulates that the mining company must generate no less than approximately $2.3 million dollars in 2021.

Blockchain standards accelerated

China’s National Development and Reform Commission called for the accelerated implementation of blockchain standards in a new plan released on April 1. The plan was jointly issued by 28 government departments and also included technologies such as cloud computing, IoT, and big data.

This weekly roundup of news from Mainland China, Taiwan, and Hong Kong attempts to curate the industry’s most important news, including influential projects, changes in the regulatory landscape, and enterprise blockchain integrations.



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