First Mover Americas: BTC Dominance Reaches 7-Month Highs, Alts Suffer

The latest moves in crypto markets in context for May 26, 2022.

Good morning, and welcome to First Mover. I’m Lyllah Ledesma, here to take you through the latest in crypto markets, news and insights.

• Price Point: Altcoins took a hit in price this morning, with ether dropping more than $100 in an hour.
• Market Moves: Bitcoin dominance over altcoins reached a seven-month high. The last time it reached this level was in October 2021.
• Feature: We take a look at data showing how USD coin (USDC) has become the stablecoin of choice on the Ethereum blockchain, not the larger tether (USDT).
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Price Point

Bitcoin (BTC) was down 1.7% over the last 24 hours and is struggling to hold $30,000. At press time, the world’s largest cryptocurrency by market capitalization was trading around $29,000.

Ethereum (ETH) took a bigger hit and was trading down 6.5% on the day, around $1,800.

“With BTC’s price not catching a bid to the upside the negativity comes out,” said Charles Storry, head of growth at Phuture, a crypto index platform.

“The narrative around BTC and crypto, in general, goes from a futuristic store of value to a scam,” said Storry. "This brings down the price till investor sentiment changes and we move back to the upside."

Altcoins appear to be suffering more than BTC, with Avalanche (AVAX) leading the drop in price. AVAX was down 12% on the day, Cosmos’ ATOM down by 10.5% and Solana’s SOL by 8%.

In traditional markets, Wall Street had a positive trading session overnight, but has since been mixed. Bonds gained ground as traders weighed the Fed’s minutes that were less hawkish than expected. News from China overnight sent Asian markets and European futures lower.

Market Moves

Despite BTC’s market capitalization declining to $552 billion, bitcoin dominance over altcoins is at a seven-month high. BTC dominance – the measure of how much of the total market cap of crypto is comprised of bitcoin – has increased to 45%, the highest the metric has gone up to since October 2021.

Bitcoin Dominance Chart, 1D (TradingView)

However, signals for BTC are still not showing signs of recovery, according to Laurent Kssis, head of Europe at Hashdex.

“We may see further downward trends in altcoins as there are still strong signs BTC is to remain below $30,000,” said Kssis, in an interview with CoinDesk.

Kssis noted that ether’s drop in price Thursday was particularly significant (ether dropped by $100 at around 9:00 UTC).

"We saw large sellers dominating the market in ether this morning which was fueled by losing interest. This is a clear absence of a bullish volatility currently witnessed in the crypto market,” said Kssis.

Latest Headlines

• Binance's Bahrain License Upgraded for More Crypto Services Binance Bahrain was granted a preliminary license in December and full license in March.
• Gaming DAO Merit Circle and YGG Caught in DAO Governance Strife Merit Circle members want to refund Yield Guild Games' investment and cancel an agreement between the two, claiming there’s not been enough value-add by the gaming guild giant.
• Former Binance Execs Create $100M Fund to Spur Crypto Adoption in Emerging Markets: Report Old Fashion Research was formed by Ling Zhang and Wayne Fu, previously Binance's vice president of M&A and head of corporate development, respectively
• Solana, Dogecoin Tokens Dip as Futures Suggests Bearish Sentiment Choppy trading in broader markets failed to temper a gradual dip in major cryptocurrencies, with some sliding as much as 8% in the past 24 hours.
• After Armstrong Tweet, India's Crypto Policy Body Says No Contempt of Court Challenge vs. RBI The Coinbase CEO last month suggested the RBI's "shadow ban" of crypto exchanges violated a Supreme Court ruling.
• Portuguese Congress Rejects Two Bills Seeking to Tax Crypto The proposals were submitted by two leftist parties. The government, which also seeks to apply taxes, hasn’t submitted a proposal so far.

Feature: Terra Snapshot Expected This Week. Here’s How 'New' Luna Will Be Distributed

By Krisztian Sandor

There has been a change in the thinking of the large crypto investors known as whales. Data shows USD coin (USDC) has become the stablecoin of choice on the Ethereum blockchain, not the larger tether (USDT).

In crypto, whales are the biggest cryptocurrency holders – institutional investors, exchanges, deep-pocketed individuals – who are capable of moving large amounts of tokens and swaying market prices. Analysts closely watch their activity to spot trends and anticipate large price movements.

Data from CoinMetrics, a blockchain analysis firm, shows wallet addresses on the Ethereum blockchain that hold more than $1 million USDC surpassed the number of wallets that hold USDT, still the largest stablecoin by market cap.

“In the current market condition, a lot of people view USDC as the safer, preferred stablecoin," Edward Moya, trading platform Oanda’s senior market analyst, told CoinDesk.

USDC, the second-largest stablecoin, has been gaining market share since the once-$18 billion UST stablecoin collapsed, and USDT’s peg to the dollar wobbled.

CoinMetrics looked at blockchain data since May 9, when UST lost its peg to the U.S. dollar. The firm identified 147 Ethereum wallet addresses that increased their USDC balance by at least $1 million while decreasing their USDT balance by at least $1 million. Among them, there were 23 that added at least $10 million USDC and disposed of $10 million USDT. Many of these addresses are exchanges, custodial services or decentralized finance (DeFi) protocols, the report added.

The report also said USDC’s advantage over Tether's USDT in so-called free float supply – the number of tokens that investors hold – on the Ethereum blockchain hit an all-time high on Tuesday among all holder groups.

"This likely reflects the fact that only large holders are generally privileged to redeem USDT and mint new USDC to capture an arbitrage," Kyle Waters, analyst at CoinMetrics, wrote in the report. "But it might also be the case that some large accounts are de-risking their holdings, turning to the perceived assurances of USDC’s monthly attestations and full-reserve backing."

Former Binance Execs Create $100M Fund to Spur Crypto Adoption in Emerging Markets

A group of former executives of cryptocurrency exchange Binance have created a $100 million venture fund with a focus on the metaverse and bringing greater crypto adoption to emerging markets.

• Old Fashion Research (OFR) was formed by Ling Zhang and Wayne Fu, previously Binance's vice president of M&A and head of corporate development respectively.
• The fund, backed by traditional venture capital funds, family offices and angel investors, will focus on the metaverse and crypto adoption in emerging markets.
• "We see a greater potential of crypto adoption in markets where people are still struggling from the underdeveloped finance and banking system," an OFR spokesperson told CoinDesk. "We also see the potential of crypto to further change people's life and work style after seeing the fast growth in Southeast Asia markets."
• The fund, whose name was inspired by the Old Fashioned cocktail, according to the fund's website, has already invested in over 50 blockchain projects. These include blockchain analytics platform Nansen, trading platform WOO Network and African gaming community Metaverse Magna.
• Despite the troubling conditions of the crypto markets in recent weeks and months, venture capital does not appear to have been overly spooked. This week Andreessen Horowitz (a16z) formed its fourth fund to invest in crypto companies worth $4.5 billion, more than double the size of its third raised nearly a year ago.

THESE PUBLIC OIL COMPANIES ARE JOINING FORCES WITH BITCOIN MINERS TO RESHAPE THE INDUSTRY

One of the world’s largest industries — oil and gas — is converging with magic internet money infrastructure, but bitcoin’s prolonged market selloff has taken some of the shine off of these monumental partnerships. Some cryptocurrency traders are even facetiously asking if energy will be a new bullish narrative for Bitcoin, bringing wind to fill its metaphorical sails as the leading cryptocurrency sits over 50% below its record price highs from late 2021.

Jokes aside, the “energy narrative” for bitcoin mining is real and gaining momentum as a growing list of mining companies and energy producers join forces. Assessing the short-term price implications of these partnerships are well outside the scope of this article, but the long-term benefits for bitcoin mining as an industry and the broader bitcoin economy are enormous. This article overviews the partnerships that are leading the merge between bitcoin mining and oil companies, and it offers some summary analysis into the specifics of why these corporate unions matter.

NORTH AMERICAN MINING PARTNERSHIPS

In the news media and general discourse, the focus on partnerships between miners and oil companies has primarily centered on North America. Most of this attention is being paid here for good reason as several of the biggest names in the oil industry are working with North American miners.

In 2021, ExxonMobil reported annual revenue of more than $285 billionwith global daily production during the same period reaching more than two million barrels per day of oil and gas. This titan of the oil industry is also reportedly working with a bitcoin mining company in North Dakota to turn otherwise wasted gas into energy for mining operations. This news spread like wildfire through the Bitcoin community when it was first published, but some off-grid mining teams already knew of Exxon’s relationships with miners. In August 2021, for example, Giga Energy co-founder Matt Lohstroh said Exxon was already selling some gas to miners.

But as the premise of this article suggests, Exxon is far from the only oil company dealing with miners.

ConocoPhillips is also supplying gas to bitcoin miners, which has been widely reported by various mainstream media outlets, including CNBC and Bloomberg.

Marathon Oil, a multi-billion-dollar oil company based in Houston, also powers co-located bitcoin mining operations with its gas. On its website’s page about emissions control, Marathon indicates it uses gas “that would otherwise be flared due to lack of a gas connection or gas takeaway capacity constraints [to] generate electricity to power co-located computing and data centers used for Bitcoin mining.”

EOG Resources, another American oil company, is also rumored to be dealing with miners by members of the industry, although official deals have not yet been reported.

And Texas Pacific Land recently signed a deal with two mining companies, Mawson and JAI Energy, to begin what JAI Energy co-founder Ryan Leachman called “the biggest bitcoin related announcement in oil and gas to date.”

INTERNATIONAL MINING PARTNERSHIPS

American companies aren’t the only ones making headlines for their bitcoin-and-oil deals though. A subsidiary of the Russian oil giant Gazprom has been planning and building its own bitcoin mining venture on its oil drilling sites since late 2020.

Below the equator, oil wells in remote areas of Australia are being used by Canadian gas company Bengal Energy to power bitcoin mining machines. According to a report from The Australian, Bengal CEO Kai Eberspaecher said his team is “dealing with stranded assets,” adding that, “We were basically looking at six months of having wells ready but without an outlet.”

That sounds like a perfect fit for some off-grid hashing.

WHY THESE PARTNERSHIPS MATTER

Bitcoin mining as an industry gains mainstream legitimacy as more traditional energy companies start to work with bitcoin miners. Even though the total magnitude of ongoing partnerships is small relative to the entire mining industry, let alone the global energy market, the significance of these first few deals cannot be understated. Exxon and others are sprinkling legitimacy on a historically maligned, misunderstood and shadowed industry. These are some of the biggest names in oil and gas production working with companies who manage computing power for a barely-decade-and-a-half-old magic internet money industry. Even four years ago, the idea of all of these names inking contracts with mining companies would be nearly unbelievable. Other metaphorical dominos will inevitably fall soon.

Related to its legitimacy is the effect that these partnerships have on bitcoin mining taking a place as energy infrastructure on or off the electric grid.

Speaking to the audience at Bitcoin 2022, Paul Prager, CEO of the public mining company TeraWulf, said, “Bitcoin mining is energy infrastructure. That’s what it is.”

That notion is hard to ignore as corporate energy titans sign deals with bitcoin miners. Of course, these mining partnerships occupy a very small share of Bitcoin’s total hash rate, but that share is sure to grow in the coming years.

WHERE EVERY MAJOR OIL PRODUCER IS A BITCOIN MINER

A future where every major oil producer is also a bitcoin miner — or at least operates a bitcoin mining arm — is very easy to imagine and could become reality soon. Particularly for the oil and gas industry, bitcoin miners continue to make inroads with more reported deals between these two industries. The milestones that these partnerships represent would be nearly unimaginable three to five years ago.

Even though bitcoin’s price is well off its record highs, the future for the infrastructure undergirding the Bitcoin network is brighter than ever. The union between oil producers and bitcoin miners is just beginning.

Ethereum Fees Reach Lowest Level Since Last Summer

Ethereum gas fees are denominated in giga wei (Gwei). Users have to pay them in order to be able to perform any activity on top of the Ethereum blockchain.

Gas fees usually get significantly higher when the network becomes too congested.   

Earlier this month, Ethereum fees experienced a huge increase due to the implosion of Terra despite the fact that the Ether price saw a huge decline

After TerraUSD (UST) lost its peg, users started transferring more Ethereum-based centralized stablecoins. Tether (USDT) and Circle’s USDC briefly became the biggest gas guzzlers on the Ethereum network.

Related Dogecoin Co-Founder Expects Luna 2.0 to Attract "Dumb" Crypto Gamblers

Ethereum continues to face criticism for having high transaction fees. Its lack of scaling has led to the emergence of such competing blockchains as Avalanche and Solana.

That said, Ethereum is expected to solve the aforementioned issue with the help of sharding after the merge.

As reported by U.Today, co-founder Vitalik Buterin predicted that Ethereum 2.0, the proof-of-stake iteration of the second-largest blockchain, could end up being launched as soon as August.

Apart from eliminating high gas fees, the merge is also expected to drastically reduce Ethereum’s energy consumption.

#Ethereum News

 

Report: The Metaverse Might Contribute $320 Billion to Latam's GDP in the Next 10 Years

A new report indicates that the metaverse might be a significant factor in the growth of economies in Latam and the world in the coming decade. The study, issued by Analysis Group, estimates that Latam might benefit from a surge of $320 billion or an approximate 5% of its GDP, in the next 10 years. This is the biggest percentage share of GDP of the regions in the study’s projection.

Analysis Group’s Metaverse Report

The metaverse is becoming a subject of intense focus in crypto and business at large, and many companies are already projecting the impact that it might have in several countries and areas in the future. In a recent report titled “The Potential Global Economic Impact of the Metaverse” issued by international economic consulting firm Analysis Group, the opportunities that the emergence of the metaverse could open in the next ten years are examined, assuming “adoption begins in 2022.”.

In the document, the researchers compare the rise of the metaverse with mobile technologies and examine the growth as if this new technology were to evolve in a similar way. This industry was selected “because of similarities to the metaverse in the way it combined existing and nascent innovations to fundamentally alter global technological and economic landscapes.”

Major Latam Growth and GDP Estimates

According to the report, the metaverse and its related activities have the potential of representing 5% of the GDP of Latam in the tenth year after adoption begins (2022), contributing $320 billion to the economies of the area. The report also projects that the growth in Latam will be the biggest percentage-wise, while the APAC region would have the biggest growth volume-wise, representing more than $1 trillion of its GDP.

Globally, the study estimates that the metaverse will generate $3.01 trillion, becoming more than 2% of the GDP of the world ten years from now. Per the report, this growth will only happen if the sector reaches its expected potential, having “far-reaching applications, with the potential to transform a wide range of economic sectors such as education, health care, manufacturing, job training, communications, entertainment, and retail.”

Other companies have also predicted the possible impact of this new activity and the economic opportunity it will present for different industries in the future. Grayscale, one of the leading cryptocurrency asset managers, estimated that the metaverse might become a $1 trillion business opportunity in the future. Goldman Sachs also predicts the metaverse will be an $8 trillion opportunity. JPMorgan has stated that this $1 trillion market “will likely infiltrate every sector.”

TAGS IN THIS STORY

analysis group, Cryptocurrency, gdp, GDP. Latam, latam, Metaverse, mobile technology, Predictions, Tokens

Eager to work: Bitcoin switch to proof-of-stake remains unlikely

 Environmental and proof-of-stake proponents have been lobbying to change Bitcoin’s mining consensus code, but history tells us why BTC is great the way it is.

Bitcoin (BTC), the original cryptocurrency that started it all and even today continues to drive the market sentiments, has faced numerous challenges along the way. The latest challenge seems to be around its mining consensus, proof-of-work (PoW) and its consequent impact on the environment.

Bitcoin network’s high energy consumption was one of the hottest topics last year, with the likes of Elon Musk fueling the sentiment that BTC in its current form is bad for the environment. Luckily enough, the mining companies for some time have been exploring the use of renewable energy, and the latest reports suggest that 58% of the BTC network’s energy comes from renewable sources.

In 2022, the debate seems to have shifted from clean energy usage to a complete change in mining consensus, with a lobby composed of billionaires and proof-of-stake (PoS) proponents calling for a change in the code of Bitcoin. The sentiment is also fueled by Ethereum’s change from PoW to proof-of-stake, slated to be completed by the end of 2022.

PoW is the original crypto mining consensus that was popularized by Bitcoin and adopted by several early crypto projects. PoS came into existence with the launch of Peercoin in 2013, and although not very popular at first, scalability and energy efficiency made it a popular choice for new crypto projects.

William Szamosszegi, CEO of Bitcoin mining platform Sazmining, told Cointelegraph that “the fundamental mistake that Greenpeace, Larsen, and other critics of Bitcoin’s energy consumption make is that they judge Bitcoin by its ‘ingredients,’ rather than its value proposition.” He further added:

“We ought to judge a novel invention by the degree to which it solves a problem in society. PoW enables sound money and a decentralized currency backed by real-world energy. PoS can not possibly achieve this.”

Recently, Bitcoin Mining Council (BMC) responded to a letter sent to the United States Environmental Protection Agency (EPA) clearing that proof-of-stake and proof-of-work are qualitatively different. Thus, it’s misleading to refer to proof-of-stake as a more “efficient” form of proof-of-work, since it does not achieve the same thing.

Proof-of-work offers true decentralization

PoW is touted as the most reliable method of reaching consensus on a blockchain. It aids in the decentralization of transactions while removing intermediaries and assuring transaction validity. The mining consensus offers equal opportunity to everyone and new miners are incentivized to add more hardware and spend more energy to receive their share of the mining rewards.

PoS, on the other hand, uses a staking system where a certain amount of capital in the form of the network’s tokens is required to become a validator. Its security is meant to be derived directly from the perceived economic value of the network or how expensive it is to purchase a majority stake.

While a lot is made out of Bitcoin’s energy consumption, which is definitely on the higher side when compared to other crypto projects, crypto naysayers often see the energy consumption as an independent metric. Meanwhile, Bitcoin’s energy consumption is directly proportional to its security, making it truly decentralized.

A lot of efforts are being made to turn Bitcoin mining greener even in its current form, however. According to a study by Galaxy Digital, the Bitcoin network consumes nearly half of the energy used by banks and gold mining.

Critics often assume that the energy used by Bitcoin miners is either stolen from more productive use cases or results in increased energy consumption. However, research studies have shown that Bitcoin miners utilize nonrival energy that may otherwise be wasted or underutilized.

Demand for changes to the core principles of the Bitcoin network is nothing new. During the Bitcoin block size war from 2015-2017, many exchanges and miners supported a Bitcoin hard fork but the Bitcoin community fought back to keep the network true to its value, as created by Satoshi Nakamoto himself. Joe Burnett, mining analyst at Blockware Solutions, believes that any attempt to change Bitcoin’s consensus algorithm “will certainly fail,” telling Cointelegraph:

“Bitcoin users, or node operators, were able to resist consensus-altering changes and upgrade the network in a backward-compatible way. This war set the precedent that Bitcoin is highly resistant to any changes that could alter its value proposition of being perfectly scarce, portable, durable, divisible and fungible.”

Looking back at some of the forks from 2018, when the block size debate was at its peak, gives a true picture of why Bitcoin shouldn’t alter its codes. The two blockchain networks that came out during the “block size war” were Bitcoin Cash (BCH) and Bitcoin SV (BSV). Both the networks have faced significant centralization and security issues and development on these networks has declined over time.

Another prominent endorsement of the PoW mining consensus is the Chinese mining ban last year. China contributed more than 60% of the Bitcoin mining power, but the blanket ban led to a complete shutdown, as miners had to cease their operations. The Bitcoin network hashing power declined overnight by more than 50%. Within a couple of months, however, the mining strength was back to pre-ban levels, showing the true power of decentralization.

Top PoS networks are reeling with issues

The biggest argument in favor of PoS is its energy efficiency and scalability. However, those advantages come at the cost of decentralization — the founding principle of cryptocurrencies. For example, Bitcoin was created with a principle of equality, promising to offer equal opportunity to anyone looking to participate. However, PoS creates a staking barrier where the highest staker has the first say in the decision-making process.

While it is true that PoS verification is less energy-intensive than the PoW system currently in place, there are fundamental roadblocks with the PoS model that significantly lower the chances of Bitcoin altering its consensus mechanism any time soon. One of the major concerns with PoS networks is the level of centralization and its subsequent impact on the security of the network. Noble Drakoln, podcast host of Accredited Investor Journal, told Cointelegraph that “PoS networks might be ‘environment friendly’ but they are not decentralized.”

This is evident from several protocol breaches on several PoS-based decentralized finance protocols and nonfungible token (NFT) games. Even the biggest PoS network such as Solana, which has seen a significant rise in adoption, has faced numerous outages over the past year. Most of the outages were caused by distributed denial of service (DDoS) attacks, resulting in a loss of consensus among validators.

Related: ​​Everything gets politicized, including crypto, says former POTUS candidate Andrew Yang

Ether (ETH), the second-largest cryptocurrency by market cap, has decided to switch to PoS to resolve scalability issues on its platform. The transition, however, has been delayed on numerous occasions and even a switch to PoS won’t guarantee seamless working. Drakoln explained further:

“Moving to POS jeopardizes that security without looking at secondary solutions to make POW work. The environmental concerns around the Bitcoin network have created a lobby calling for a change of code from proof-of-work to proof-of-stake. However, PoW is key to Bitcoin's decentralization.”

The need for consensus mechanisms is to not only secure the network but allow for scalability. Ether, for example, has different use cases in comparison to Bitcoin and needed to scale differently as a result, leading to Eth2 adopting PoS moving forward.

Related: Mixing reality with the Metaverse: Fashion icon Phillip Plein goes crypto

Bitcoin, on the other hand, only needs to process the transactions on the network allowing for PoW to build toward maximum network security while leveraging layer-2 applications such as the Lightning Network or Stacks to make up for that scalability as the mining aspect moves toward more energy-efficient options.