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Officially, Wednesday, Nov. 14 will go down as the worst trading day of the year, as BTC sunk to record lows. Unofficially, there were still green shoots to be found if you knew where to look — mostly to the stablecoin sector. These dollar-pegged assets, normally so resistant to volatility, have been trading at a premium as investors seek sanctuary from the storm.
Also read: Preparing for the Looming Bitcoin Cash Fork
Nov. 14: Bad Day for Cryptocurrency –
Good Day for Stablecoins?
On a day when the the market turns red, any crypto-asset that can produce a profit is generally hailed. But when that asset is a stablecoin whose primary directive is to hold fast, it’s hard to know what to make of things. As the price of BTC reached its lowest point since Oct. 24, 2017 — bringing the rest of the market down with it — the only winners were stablecoins. As demand for these pegged assets intensified, the charts for many of them began to to resemble a classic altcoin pump.
On Binance, trueusd (TUSD) reached $ 1.07, with paxos (PAX) not far behind at $ 1.05. The two coins were the biggest gainers out of all 158 assets on Binance, up almost 15 percent, while most of the market nursed deep double-digit losses. TUSD was the sixth-most popular asset on Binance on Nov. 14, with volume of 2,650 BTC. On other cryptocurrency exchanges, it was a similar story, with the Gemini dollar (GUSD) passing $ 1.03.
The Tether Premium
One pattern that has emerged during times of deep market losses is for BTC to trade at a premium on tether-based exchanges. This so-called “risk premium,” attributed to the mistrust some traders have in tether (USDT), even during times of extreme volatility, sees BTC trade for as much as $ 300 more per coin than on exchanges that aren’t wholly reliant on USDT. Tether’s relative volatility over the past month, slipping from its dollar peg to as low as $ 0.88 at one point, has prompted traders to seek out ways to profit from flipping USDT. A guide to trading tether, published today, advised:
It’s an important cryptocurrency to understand as it facilitates trading and access to some of the most liquid currency pairs in the crypto markets … It’s also an important linkage between different exchanges, allowing for arbitrages between fiat and non-fiat exchanges more efficiently due to its relatively stable price.
Most dollar-pegged stablecoins were trading at over $ 1 at the time of writing, but there have been a couple of exceptions. Bitusd, which is only tradable on the Openledger DEX, flash-crashed to $ 0.83 earlier today, and was sitting at $ 0.97 prior to publication. Dai, meanwhile, was trading at just under a dollar, having gone as low as $ 0.97. For the more liquid stablecoins, however, which boast a significantly larger market cap than the likes of dai, today’s buying pressure has created a premium. While most traders are closely eyeing the BTC and BCH tickers, they may as well be watching a stablecoin such as TUSD or GUSD. When the stablecoin spike finally flattens out, the worst should be over.
Do you think BTC will plunge lower still or is this the bottom for 2018? Let us know in the comments section below.
Images courtesy of Shutterstock and Coin360.io.
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Starting next year, United Airlines will make it more difficult to reach the MileagePlus plans’ most elite status level — Premier 1K — but the carrier is offering a new perk for such top-tier fliers.
Starting Jan. 1, members of the loyalty reward program must spend a minimum of $ 15,000 and accumulate…
This is a paid press release, which contains forward looking statements, and should be treated as advertising or promotional material. Bitcoin.com does not endorse nor support this product/service. Bitcoin.com is not responsible for or liable for any content, accuracy or quality within the press release.
iCoinbay released a new trading campaign entitled [Trading Premium Gain]; iCoinbay is a tokenized, community-based digital asset exchange. This new campaign allows traders who use the platform to increase their earnings through normal trading activities. According to publicly released information, the plan can be summarized as follows:
1.Issuance of TPG tokens worth 100% the value of transaction fees
According to their released “TPG White Paper”, iCoinbay thinks that users’ normal usage of the platform should count as contribution to the community. With each transaction, a corresponding amount of the platform’s token, TPG, will be issued to the trader(s).
2.70% of exchange income distributed to TPG holders
As described in their white paper, holders of the platform’s TPG tokens have the right to income distribution. Each week, iCoinbay will distribute 70% of previous week’s income to community members, based on the proportion of TPG held.
3.Pioneer insurance system designed specifically to protect TPG value
The interesting part is that iCoinbay has also rolled out an insurance system. In order to better protect TPG holders from price fluctuations on the secondary market, iCoinbay’s campaign includes an insurance policy specifically made for TPG tokens. No matter how the market moves, after 100 days, holders of TPG will be able exchange them for stablecoins at their originally issued price.
iCoinbay uses the theory of a token economy as the basis for their platform, and develops each aspect of their business with three values in mind: joint development, joint success, and joint responsibility.
Although tokens and blockchain are two different things, the driving force behind blockchain’s recent explosion in popularity has actually been the token economies that developed around Bitcoin, Ethereum, etc. Another way to put it is that blockchain is the stage for a new world, and tokens are the main actors on this stage. Based on this, iCoinbay is concentrating on building an exchange that allows community members to trade safely while using traditional financial measures (such as insurance) to protect the value of traded assets.
Contact Email Address
This is a paid press release. Readers should do their own due diligence before taking any actions related to the promoted company or any of its affiliates or services. Bitcoin.com is not responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in the press release.
Last year on December 22 a firm purchased a $ 1 million dollar options trade on the Ledger X platform that wagered the BTC/USD market price will be $ 50,000 by the last month of 2018. This week Juthica Chou, the president of Ledger X chatted with Jared Blikre at the Yahoo Finance All Markets Summit’s cryptocurrency presentations and explained to the audience how the bitcoin trade was settled for a premium.
The Mysterious Bet Placed Last December That Wagered Bitcoin Will Touch $ 50K By the End of 2018
Last year after the price of BTC hit the $ 19K region on December 16, the cryptocurrency’s value started tumbling downwards and touched the $ 15K zone just before the holidays. On December 22 a company surprised a lot of people when they purchased a Ledger X futures contract betting the price of bitcoin would be $ 50,000 by the last month of 2018. An individual “familiar with the matter” told the publication Business Insider that the $ 1 million bet on bitcoin was placed by a firm called Blocktower Capital. Blocktower is a well-known hedge fund that has 175 startups under its belt, and was founded by Ari Paul a former executive at Susquehanna. After the Ledger X sale was executed Paul tweeted to his Twitter followers, “I wonder who bought these?”
Earning Yield Off of Bitcoin Market Volatility
At the Yahoo Finance All Markets Summit this week the president of Ledger X, Juthica Chou, explained how the call overwrite was executed and some of the reasoning behind the trade.
“This is an example of a call overwrite that was done back in December,” Chou explains showing the audience a chart of the million dollar trade settled on December 22. “So a lot of our market participants are bitcoin holders or have bitcoin on their balance sheet — But they are not really earning any yield off of it, so a common type of trade, even in the stock space to earn yield is something like a call overwrite.”
In this case back then bitcoin was $ 15,000 USD, the seller deposited 275 BTC with Ledger X. Then they sold 275 of the $ 50,000 strike call options expiring on December 2018.
A Million Dollars in Premium Made That Day
Chou explains behind the scenes the trade is very profitable as the contract buyers sold the options for a premium the day the trade took place.
“So one way to think about it is on trade date they sold these options for $ 3,600 per option,” Chou reveals to the All Markets Summit’s Jared Blikre. “Given the volatility of bitcoin, it’s a pretty healthy premium which is about 25 percent of the spot price at the time.”
They collected a million dollars in premium that day, and as soon as the trade is done, the premium is in their account and they can withdraw it. Then the trade gets held for a year or until someone trades out of it — So that expiration if bitcoin is above $ 50,000 then the seller will essentially sell the bitcoin for $ 50,000 and received another $ 14 million dollars.
Virtual Trading Pits Designed With Digital Currency In Its DNA
The president of Ledger X seems optimistic about the future of digital currencies and explains her firm is adding some of the old aspects of stock trading to the modernized cryptocurrency scene. One of the ideas is a ‘virtual trading pit’ modeled after the ‘pits’ stock traders used in the past to gather and trade shares and options. Most stock exchange pits have since been replaced by electronic trading services, and some of the largest trading floors have closed down.
“Were actually bringing back the social pit nature of trading and we launched a beta version of what we call ‘The Pit’ and it really harkens back to the pit days,” Chou adds.
A lot of the great elements of the social trading pit, people exchanging market color, knowing who their counterparties are, but we’re doing it in more of a modern way that’s specifically designed with digital currency in its DNA.
What do you think about the million dollar options bet placed on the Ledger X exchange? Do you think the idea of virtual pits would be a good concept for digital currency traders? Let us know what you think in the comments below.
Images via Pixabay, Ledger X, and Yahoo Finance.
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The post Ledger X President: $ 50K Bitcoin Bet Saw a $ 1M Premium the Same Day appeared first on Bitcoin News.
This week bitcoin surpassed $ 19,000 on global exchanges, with the exception of one continent – Africa. Customers of the world’s second largest and second most populous continent were already paying that much per coin back in November. Prices at Africa’s Golix.com exchange have been 40% higher than the rest of the word for months. Now news.Bitcoin.com can reveal why.
Africa is Illiquid
On November 15, it was revealed that Zimbabweans were paying $ 13,500 for bitcoin, a sum that was described at the time as “eye-watering”. Last month’s expensive bitcoin is this month’s cheap bitcoin, and the intense demand for the digital currency has since pushed it to over $ 19,000 globally as of this writing. The premium that’s been in place at the continent’s Golix exchange remains in place though. As a consequence, one bitcoin there is currently trading for around $ 32,000, down slightly from a peak of $ 34,000.
“Who’s talking about us?” runs a banner on the homepage of Golix alongside logos for media organizations that include CNN, CNBC, Reuters, and news.Bitcoin.com. Everyone in bitcoin is talking about Golix and they’re all asking the same question – why? Why is it so expensive to acquire the virtual currency in Africa? The answer comes from a recent blog post on Golix which outlines the factors that have contributed to the premium price.
Digital Scarcity in a Land of Poverty
Bitcoin has always traded higher in nations such as Zimbabwe, South Africa, and Nigeria apparently, but previously only by around 10%. One reason why buyers will pay over the odds for their cryptocurrency in Africa is due to a lack of liquidity. When there’s a shortage of sellers, it’s easy for players to set higher prices in the knowledge that their orders will still be filled. In countries such as Nigeria and Angola, this has forced buyers to pay as much as a 100% markup for bitcoin.
With demand outstripping supply, exacerbated by the failings of hyperinflationary fiat currencies, overpriced bitcoin is still seen as a better deal. Any port in a storm and any price to obtain a deflationary currency that will hold its value and then some. There’s another reason why bitcoin is so expensive in Africa though, which the Golix blog only references in passing – power.
Africa Has a Power Vacuum
Africa is one of the worst places in the world to mine bitcoin. It’s hot, dusty, and suffers from poor infrastructure. Power blackouts are a daily occurrence in many parts of the continent, making Africa wholly unsuited to mining. In South Africa, utility companies regularly engage in “load shedding” – imposing national blackouts to ease the demand on the electricity grid. As an NYT report from 2015 notes: “All of sub-Saharan Africa’s power generating capacity is less than South Korea’s, and a quarter of it is unproductive at any given moment because of the continent’s aging infrastructure.”
In Nigeria, meanwhile, the national power supply is so patchy that most of the country runs on private generators. On other continents, cryptocurrency mining ensures a steady supply of coins moving onto exchanges as miners seek to pay their bills and cash in their profits. In their absence, virtually no one in Africa is selling bitcoin. Power issues aside, the continent’s internet is also poor, with most Africans reliant on mobile data. Finding a stable source of power and internet with which to mine cryptocurrency is nigh impossible.
Bitcoin might be unsuitable for mining and priced at a premium, but Africans have at least one other means of getting their hands on cryptocurrency – by earning it. It’s a slow accumulation strategy, but one in which they are at less of a disadvantage. From Steemit to the bitcoin cash-friendly Yours.org, there are plenty of sites that will remunerate contributors in crypto. The process requires hard work and perseverance, but Africans aren’t afraid to graft. Given the financial stability and possible route out of poverty afforded by cryptocurrency, it’s no wonder Africa has developed a taste for bitcoin.
Would you still buy bitcoin if you had to pay a 40% premium for the privilege? Let us know in the comments section below.
Images courtesy of Shutterstock.
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The post Bitcoin is Trading at a 40% Premium in Africa – Here’s Why appeared first on Bitcoin News.
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