Futures on various exchanges have been spiking, led by Hong Kong-based OKEx, according to data from research firm Skew.
Traders are attempting to hedge risk with the coronavirus casting a pall over market activity and the upcoming bitcoin halving event in mid May adding uncertainty.
Announcements by President Trump Wednesday rolled out number of plans to combat coronavirus. During the president’s address, a circuit breaker hit U.S. equities around 16:00 UTC Wednesday, which paused trading in the markets for approximately 15 minutes.
The Dow Jones Industrial Index is now down to its lowest point since Trump took office in 2017.
Trump’s attempts to boost markets and stave off virus fears are multifaceted. They include invoking the Defense Production Act to ramp up medical supply manufacturing and ordering Housing and Urban Development to suspend evictions and foreclosures. Discussion of an over $1 trillion stimulus package for Americans was also a topic during his speech.
At the same time, the speed at which cryptocurrencies can handle transactions, particularly on-blockchain and off spot exchanges, continues to be a problem. It gunks up the whole system for traders.
This problem was supposed to be fixed in 2017, when bitcoin forked into two separate chains - bitcoin cash and bitcoin.
Bitcoin cash faces liquidity issues, trading a minuscule 6 percent of the total daily volume of bitcoin, according to data from CoinGecko.
And bitcoin itself? Deployment of "layer 2" solutions to fix bitcoin transaction delays haven't developed to the point traders can use them on their favorite exchanges.
With a combination of bad coronavirus news and stimulus in the days and weeks ahead, traders are likely to jam-pack cryptocurrency networks. Futures (like OKEx), derivatives and other leveraged products look attractive in these environments where volume can spike through leverage instead of having to move crypto around congested networks.
Seychelles-based crypto derivatives exchange BitMEX will likely be a big part of this, and could continue to affect price swings. An exchange-flummoxing day on March 12 left traders unable to access the BitMEX website for a period of time as bitcoin crashed. Now, the BitMEX insurance fund, used to cover crazy crashes like this, has been see-sawin' as of late.
But zoom out, and those swings are mere motes on a mountain of total BitMEX insurance.
What is the scenario when that BitMEX insurance bitcoin would be put to use? The worst of worst case scenarios, which apparently wasn't this past week.
Bitcoin Faces Tough Day as Equities Reject Stimulus Efforts
“Global equities markets continue to reject stimulus efforts put forward by the U.S., with the S&P 500 recording its largest one day drop on Monday since 1987," said Matthew Dibb, co-founder and COO of Stack, a provider of cryptocurrency trackers and index funds.
BitGo to Extend Crypto Insurance Coverage to Over $100M
A couple of years back, cryptocurrency custodians and large exchanges struggled to secure insurance against the loss of digital assets. But more recently, syndicates within Lloyd’s of London specialist insurance market have been taking on more risk and increasing capacity in the market.
Dollar-Backed Stablecoins Are Holding Their Own
Stablecoins are unflappable during the Covid-19 outbreak. U.S. dollar-backed stablecoins such as Paxos Standard (PAX), Tether (USDT), USD Coin (USDC), Binance USD (BUSD) and TrueUSD (TUSD) have retained market capitalization, with only slight changes.
Wave Financial to Tokenize $20M Worth of Bourbon
Known as the Wave Kentucky Whiskey 2020 Digital Fund, investors will be able to purchase asset-backed tokens linked to an inventory of whiskey barreled this year. Stored and maintained by the Wilderness Trail Distillery, the fund will represent up to four million bottles, and whiskey-backed tokens are expected to be traded.
LISTEN: The Price Ride
Host Adam B. Levine and John Biggs talk about bitcoin's struggle to gain a foothold amid market volatility, four million bottles of bourbon on the blockchain and Canadian bitcoin scammers getting caught.
Thieves Swindle $2M in Crypto From Coronavirus Preppers
More than 90 percent of the scam crypto transactions were received in tether (USDT), 5 percent in bitcoin (BTC), 2 percent in ether (ETH) and a small amount in “a wide breadth” of other cryptocurrencies. Many of the scams began in east and Southeast Asia, but some are now popping up in the United States.
Tweet of the Day
Mike Alfred is co-founder and CEO of Digital Assets Data. He must not be reading CoinDesk since the discussion on cryptocurrency as a safe haven, both for and against, has been ongoing, including:
Trend: Bitcoin is holding steady in an ascending triangle pattern on the 4-hour chart as the U.S. dollar becomes king of the forex markets.
Currencies like the Australian and New Zealand dollars are trading at decade-plus lows, while oil-sensitive currencies like Mexico's peso and Norway's krona are trading at record lows against the greenback. Traditional safe havens like gold and the Japanese yen are also flashing red.
The greenback has emerged as the preferred safe haven globally, with the dash for cash accelerating amid the persistent coronavirus fears.
Bitcoin's resilience has strengthened the case for a rise to resistance at $5,900, which, if breached, would confirm an ascending triangle breakout and shift the focus to the next hurdle at $6,400. However, if the triangle is breached to the downside, a drop to the March 16 low of $4,400 could be seen.
Disclaimer: The information presented in this message is intended as a news item that provides a brief summary of various events and developments that affect, or that might in the future affect, the value of one or more of the cryptocurrencies described above. The information contained in this message, and any information liked through the items contained herein, is not intended to provide sufficient information to form the basis for an investment decision. The information presented herein is accurate only as of its date, and it was not prepared by a research analyst or other investment professional. You should seek additional information regarding the merits and risks of investing in any cryptocurrency before deciding to purchase or sell any such instruments.
Battling the Leveraged Crypto Markets