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1. $10 Billion liquidated during market turmoil

The Facts:

  • On April 18, Bitcoin shed off some of its recent gains, dropping -20% percent within hours.
  • Correlations during the drop were generally high, and many other cryptocurrencies dropped by similar magnitude.
  • During the market-wide correction, more than $10 billion worth of leveraged positions were liquidated.

Why it’s important:

  • Initial selling pressure can sometimes be exacerbated by liquidation of margin positions, leading to a cascade of liquidations.
  • The total size of liquidations being absorbed relatively well is a testament to the increased maturity and liquidity of the markets. For comparison, during the -50% March 2020 sell-off, about $1.5 billion were liquidated.
S01E11_Drop
Source: Tradingview.com

 

2. Bitcoin hash rate dropped temporarily

The Facts:

  • Bitcoin’s hash rate reached an all-time high of 172M TH/s on April 16, before dropping sharply down to 142M TH/s on April 20.
  • The drop in hash rate may be related to recent accidents in Chinese coal mines, cutting off power to some miners.
  • Miners seemed to get back access to power on April 22, leading to a recovery of the hash rate.

Why it’s important:

  • Miners and their hash rate are crucial for Bitcoin’s network security. A purely temporary drop in the hash rate due to external circumstances is not a reason for concern, though.
  • As a result of the drop in hash rate, Bitcoin’s average block time spiked to ca. 13 minutes, and transaction fees increased.

 

3. Venmo introduces crypto

The Facts:

  • Venmo announced on April 20 that they will enable crypto purchases through the app.
  • Initially, Bitcoin, Ether, Litecoin and Bitcoin Cash will be available.
  • The new offering will be available to more than 70 million customers.

Why it’s important:

  • Venmo’s move to crypto is not surprising, given that PayPal already offers crypto to its customers.
  • It is, however, a further sign of mainstream adoption of cryptocurrencies, enabling access to millions of people. Like PayPal, however, Venmo likely will not allow people to withdraw their cryptocurrency.
  • The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust.
    Satoshi Nakamoto

 

4. Three Ether ETFs launch in Canada

The Facts:

  • On April 20, three ETFs providing exposure to ETH began trading on the Toronto Stock Exchange.
  • The move follows shortly after a Bitcoin ETF has was launched in Canada.
  • Annual management fees for the ETFs range from 0.4% to 1%.

Why it’s important:

  • The Ether ETFs will provide exposure for investors that are only able to access crypto assets via traditional, regulated exchanges.
  • The Ontario Securities Commission appears to take a fostering stance towards cryptocurrencies, especially in comparison to their U.S. counterpart. In the U.S., so far, no ETF application has managed to meet the requirements of the regulator.
  • Number of the Week
    1 Million
    Individual leveraged positions liquidated during the drop of last weekend

 

5. CBDCs: Sweden, Russia and the UK push ahead

The Facts:

  • The U.K. is launching a new task force to “coordinate exploratory work” on a potential CBDC.
  • The Central Bank of Russia outlined their strategy for the payments infrastructure in the country on a multi-year horizon, possibly including a digital ruble.
  • Within five years, Sweden plans to have an operational digital currency.

Why it’s important:

  • Central banks around the world continue to explore CBDC or have already launched pilots. While China seems ahead in the race to the first digital currency, with various large-scale tests conducted, others are catching up.
  • CBDCs would also make the array of tools available to the central banks more powerful, and might allow introduction of deeply negative interest rates or easier distribution of “helicopter money”.

 

In other News:

  • Turkey’s central bank bans the use of crypto for payments (via The Block)
  • PBoC vice governor says China regards crypto assets as investment alternatives (via The Block)
  • Multi-billion-dollar trust backs Kraken ahead of possible listing (via Cointelegraph)
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