Blockchain Bites: Bitcoin Shorts In, MicroStrategy Stock Downgraded, Bitwise Index Trades

Bitcoin’s options market has flipped bearish for the short term while Citi analysts downgrade MicroStrategy's stock.

Dec 9, 2020 at 5:18 p.m. UTC
Updated Sep 14, 2021 at 10:40 a.m. UTC

Bitso raised $62 million to expand its Latin American footprint. One of the world's oldest banks will issue a euro stablecoin on the Stellar blockchain. Elliptic, a blockchain analytics firm, found 13% of the proceeds from crime involving bitcoin travel through “privacy wallets."

Top shelf

Cornered market?
Latin American crypto exchange Bitso has raised a whopping $62 million funding round, the largest in the region for a digital asset firm. Announced Wednesday, Mexico City-based Bitso’s Series B also heralded the first investment in crypto by renowned fintech VC firms QED Investors and Kaszek Ventures, which led the fundraise. With the capital, the company, which now boasts over over one million users and has cornered the Mexican and Argentinian crypto markets, looks to expand to the rest of Latin America, particularly Brazil.

Stellar stablecoin
Germany’s Bankhaus von der Heydt (BVDH), one of the world’s oldest banks, will issue a euro stablecoin on the Stellar blockchain network. Bitbond, a component in the project, has already partnered with the Stellar Development Foundation to issue a euro-denominated stablecoin with Tempo, and has also received approval from the German regulator BaFIN to issue tokenized bonds, also on Stellar. A fiat currency transfer is held at an escrow account at BVDH, which then triggers the issuance of the stablecoin.

Declining profit
The British arm of the U.S. cryptocurrency exchange Coinbase saw a sharp downturn in business in 2019, with annual profits dropping by nearly a quarter year on year as a result. In a filing with the U.K.'s business registrar Companies House on Tuesday, Coinbase UK reported turnover of €94.8 million (US$114.9 million) in 2019, down 38% from €153 million ($185.6 million) in 2018. Still, after taxes, Coinbase UK netted some €5.1 million ($6.2 million) – though that, too, is down by 22.5% from €6.6 million ($7.9 million) the year before.

Bertelsmann-backed
Greenfield One, an early-stage crypto venture firm based in Berlin, has secured its first major backers for a second fund, including an investment from publishing giant Bertelsmann. Greenfield invests in “crypto networks and developer teams that use blockchain-based technology to create the infrastructure for Web 3.0,” according to the press release. “There seems to be a trend emerging with existing Ethereum applications moving over to other ecosystems, which is something we are excited about even though we remain long-term bullish on Ethereum,” Sebastian Blum, of Greenfield, said.

Downgraded
Following MicroStrategy’s latest bid to raise funds to invest in bitcoin, Citibank analysts have downgraded the company’s publicly traded stock. Citi analyst Tyler Radke lowered his recommendation on MicroStrategy to “sell” from “neutral,” warning investors in a Tuesday research note the company’s recent bitcoin euphoria may be overextended. Radke cited CEO Michael Saylor’s “disproportionate focus” on bitcoin as a potentially troubling trend for the business intelligence company. He also said MicroStrategy’s planned $400 million debt offering to fund additional bitcoin purchases signals “incremental risk to the story.”

Crypto index
Bitwise Asset Management announced Wednesday its 10 Crypto Index Fund is now live as a public-traded cryptocurrency index fund. Listed under the ticker symbol “BITW” and open to U.S. investors, shares of the fund will be tradable through traditional brokerage accounts and the assets will be custodied with Coinbase Custody Trust Company. The fund will track the Bitwise 10 Large Cap Crypto Index, a diversified, market cap-weighted index of the 10 largest cryptocurrencies. As of Nov. 30, the fund held approximately 75% bitcoin and 13% ethereum. The firm has had several failed bids to launch a bitcoin exchange-traded fund (ETF).

Washed?
Elliptic, a blockchain analytics firm, found 13% of the proceeds from crime involved bitcoin travel through “privacy wallets” – a 2% increase from 2019. In a report published Wednesday the firm estimated that some $160 million in bitcoin was laundered through privacy wallets this year, typically originating from scams, thefts and the darknet. These are tools like Wasabi Wallet and CoinJoin transactions, which work by mixing BTC transactions to obscure the users.

Quick bites

  • SWAPPING COINS: First CoinSwap test could herald an era of stronger Bitcoin privacy (CoinDesk)
  • OVER TROUBLED: Bridgewater’s Ray Dalio softens stance on crypto, saying the assets “established themselves” and were interesting “gold-like asset alternatives.” (CoinDesk)
  • VALID POINTS: Ethereum 2.0 soars past one million ETH staked. (CoinDesk)
  • KYC, OUI OUI? France is on the verge of imposing mandatory KYC rules for all crypto transactions, industry sources say. (The Block)
  • CRYPTO ATTACKED: Websites including Trezor, Poloniex and The Block have all suffered DDoS attacks in recent days. (Decrypt)
  • RIPPLING OUT: For Ripple co-founder Jed McCaleb continues to receive and sell XRP, including a recent 30 million XRP dump. (Decrypt)
  • CRYPTO THESES: Messari’s annual report tops 130 pages. (Messari)

Market intel

Short sell
Omkar is breaking out terms like “downside break” and “key support” “verge of crossing” and “bearish territory.” I am, of course, referring to CoinDesk’s markets oracle Omkar Godbole, who pieces together the market intel you’re reading right now. According to Godbole, bitcoin’s price position doesn’t look great – “bitcoin’s options market has flipped bearish for the short term, as demand rises for ways to hedge against further sell-offs in the spot market” – as the market dipped to its lowest level since Nov. 29, $17,640. While it has since bounced back (at press time), there are a growing number of shorts being taken out. Some 300 contracts are betting another fall to $17,000 have been traded on Deribit since midnight UTC, for instance.

At stake

Most influential
CoinDesk went live yesterday with its annual Most Influential series, a package of 12 stories, and accompanying non-fungible (NFT) artworks, honoring those who have had the biggest impact in the crypto industry this year.

Among the “most influential” are Paxos’ Charles Cascarilla, for his involvement in getting PayPal to offer crypto functionality; Protocol Lab’s Juan Benet, for launching the decentralized file storage network Filecoin; and Linda Lacewell, for lowering the barrier to entry to operating a regulated crypto firm in New York, among many more.

It’s an exciting series with tons of great writing and big personalities. I encourage you to check it out. Additionally, CoinDesk has teamed up with crypto charity platform The Giving Block as well as NFT marketplaces Nifty Gateway and Super Rare to auction off portraits of the nominees. Six crypto artists contributed work, who will all split their profits from the sold artworks with charity.

Who won #CryptoTwitter?

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