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Cryptocurrency

Fintech CEO: Greed in Markets Doesn’t Adequately Explain African Crypto Explosion

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Last week, the headline from an interview with Marius Reitz, was: “We see a lot of greed in the market”, says Luno Africa GM. Within the interview, he also noted that emerging markets have been driven by retail demand, even noting that the data is showing that people buy “a set amount of Bitcoin on a monthly basis on payday.”

“The headline of this interview — greed in the markets — really doesn’t adequately delve into the nuance we see, especially within emerging markets, including most of the African continent,” noted Richard Gardner, CEO of Modulus, a US-based developer of ultra-high-performance trading and surveillance technology that powers global equities, derivatives, and digital asset exchanges. “It isn’t so much that the interview didn’t note other elements at play, but the narrative that greed is the primary reason for the crypto-explosion… it just doesn’t hold up.”

“If we want to look at greed in a marketplace, look no further than the NFT craze we’ve witnessed this year. Granted, those buying in are probably largely a result of wanting to be an early adopter of a new tech phenomenon. But, it could be argued that those selling the NFTs are driven by greed,” Gardner conceded. Last month, the New York Post wrote a story on Alex Ramírez-Mallis, a film director who launched, and successfully sold pieces of, an NFT collection featuring his quarantine farts.

“But NFTs are a whole different ball of wax. When you’re looking at the cryptocurrency boom, there are so many factors at play, and it is hard to say that any one driver, in particular, is the culprit. For example, institutional investors drove up prices initially, but to say that their action is not still motivating Main Street would be shortsighted. Many retail investors saw the big guys getting in, and they said, ‘heck, if it’s good enough for BNY Mellon, it’s good enough for me.’ When they see Mark Cuban and Elon Musk and even Mr. Wonderful, Kevin O’Leary, backing crypto, the industry really begins to be rebranded. It no longer appears to be fringe,” said Gardner.

“In emerging markets, though, and in particular, some of the African markets like Nigeria, where we’re seeing high inflation — that’s a driver in and of itself, moving the folks towards cryptocurrencies, which are being viewed as a refuge against the struggling Naira. Bitcoin, and more generally cryptocurrencies, are billed as an alternative currency. People bandy about ideas discussing whether or not it will eventually overtake the dollar as the global reserve currency, but those discussions are mostly academic when compared to the real world struggles that the citizenry, in places like Venezuela and Nigeria, are having with inflation. For those dealing with hyperinflation, they’re not looking at fundamentals or the quality of technology behind a particular digital currency. They’re looking at where they can put their savings so that, next month, it isn’t worth significantly less. That’s a strong motivator, and it is the elephant in the room when we talk about regulation in countries with high inflation, too,” said Gardner.

Modulus is known throughout the financial technology segment as a leader in the development of ultra-high frequency trading systems and blockchain technologies. Over the past twenty years, the company has built technology for the world’s most notable exchanges, with a client list which includes NASDAQ, Goldman Sachs, Merrill Lynch, JP Morgan Chase, Bank of America, Barclays, Siemens, Shell, Yahoo!, Microsoft, Cornell University, and the University of Chicago.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

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Cryptocurrency

Total Market Value of Top Three Stablecoins More than Tripled YTD and Hit $110B

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Stablecoin - Investors King

In the wake of growing interest in the crypto market, stablecoins or cryptocurrencies linked to an asset have seen their market capitalization surge this year.

According to data presented by MejoresApuestas, the combined market cap of Tether, USD Coin, and Binance USD, as the world’s top three stablecoins, more than tripled since the beginning of 2021 and hit over $110bn this week.

Tether`s Market Cap Jumped Over $68B, a 158% Increase YTD

Unlike other cryptocurrencies, stablecoins are relatively less volatile, and their value is determined differently. For example, the price of Bitcoin mainly follows demand and supply, or how many coins are being mined and how many investors want to buy the crypto. On the other hand, stablecoins are connected to the price of an altogether different asset.

Tether’s USDT, for instance, is connected to the price development of the US dollar. If the US dollar falls in the FX market, so does the USDT. However, the price of the fourth-largest crypto by market cap spiked in 2021.

The CoinMarketCap data revealed that Tether’s market cap jumped by 158% year-to-date, rising from $26.5bn in January to $68.3bn this week. Also, as the world’s most traded cryptocurrency, Tether saw its trading volume increase by 35% last month. In July, the world’s most used stable coin hit $1.48trn in monthly trading volume. Statistics show this figure hit over $2trn in August.

Binance USD Market Cap Soared by 742% YTD, the Biggest Increase Among Top Three Stablecoins

Stablecoins are essential for two areas in digital payments that do not prefer volatility. One of them is the Decentralized Finance or DeFi market that relies on cryptocurrencies for payments and loans.

Also, they are seen as the inspiration for so-called CBDC or Central Bank Digital Currencies, like China’s e-CNY currency or the digital euro, an electronic form of money issued by the Eurosystem.

Although far behind Tether as the world’s leading stablecoin, USD Coin has seen much more significant market cap growth this year. Statistics show the market capitalization of the second-largest stablecoin surged by nearly 400% over the past nine months, reaching $29.2bn this week.

Still, that was nearly twice less compared to Binance USD growth this year. In January, the combined value of all Binance USD coins stood at $1.48bn or almost 18 times less than the leading Tether. However, this figure soared to $12.5bn, showing an impressive 742% growth year-to-date.

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Ethereum

Ethereum Adds Over 38 Million New Addresses in 2021, 22% of All Ever Created

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Ethereum - Investors King

The Ethereum network has recorded a surge in popularity, with more investors aiming to own part of the second-ranked cryptocurrency. The interest is highlighted by the number of unique new addresses created in 2021 alone.

Data acquired by cryptocurrency trading simulator Crypto Parrot indicates that an average of 149,843 new unique Ethereum addresses has been created daily in 2021 on a year-to-date basis. The highest number of new addresses was created on June 5th at 332,094. So far, in September, a total of 1,389,999 new unique addresses have been created.

Elsewhere, by September 2021, 38,256,193 new Ethereum addresses were created in 2021, accounting for 22.59% of all ETH addresses ever created to date. In general, the cumulative number of Ethereum addresses to be created since inception stands at 169,296,775.

Impact of Ethereum network upgrades on new addresses

Currently, the Ethereum network is undergoing upgrades geared towards transitioning from the proof-of-work protocol to the proof-of-stake system that is energy efficient.

The upgrades play a key role in determining the number of new Ethereum addresses created, and the report takes note of this factor. According to the research report:

“The drop in new addresses comes at a point the Ethereum network upgrade is expected to create a deflation over time as it modifies the auction process. Furthermore, with Ethereum transitioning to the proof-of-stake protocol, the network will likely experience an influx of new users who want to cash in on the staking.”

The new address follows the recent cryptocurrency bull market that saw Ethereum surge in value to a new all-time high price. However, the addresses have plunged in correlation with the general crypto market.

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Bitcoin

MicroStrategy Acquires Additional 5,050 Bitcoins

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MicroStrategy- Investors King

Business intelligence outfit and corporate Bitcoin (BTC) whale MicroStrategy has increased its BTC ownership with the additional purchase announced on Monday.

MicroStrategy CEO Michael Saylor announced the purchase of 5,050 BTC for about $242.9 million at an average of $48,099 per coin.

In a Form 8-K filing with the United States Securities and Exchange Commission published on Monday, MicroStrategy stated that it had added 8,957 BTC to its corporate Bitcoin treasury in Q3 2021.

As previously reported, MicroStrategy recently bought 3,907 BTC at the cost of about $177 million between July 1 and Aug. 23.

Following the latest Bitcoin acquisition, the company now holds about 114,042 BTC acquired at an aggregate purchase cost of $3.16 billion. Given the current BTC spot price, the company’s Bitcoin holdings are valued at over $5 billion.

According to the Form 8-K document, MicroStrategy’s Bitcoin cost comes down to about $27,713 per BTC, including fees and sundry expenses.

The additional 5,050 BTC purchase is yet another indication of its intention to expand its Bitcoin position. Despite paper losses on its Bitcoin investment in Q2, MicroStrategy has stated its Bitcoin appetite remained unaffected.

Since announcing its maiden BTC purchase back in August 2020, the business intelligence company has bought more Bitcoin becoming the largest corporate holder of the largest crypto by market capitalization among publicly traded firms in the United States.

Saylor has also become a prominent Bitcoin proponent, regularly encouraging other U.S. firms to add BTC to their balance sheets.

Monday’s purchase announcement comes amid a price decline for Bitcoin, with BTC down almost 3% in the last 24-hour trading period.

The total cryptocurrency market capitalization is down more than 4% as token prices slipped on Monday.

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