Five Things In Crypto This Week: Bitcoin ETF, Inflation, And FTX’s $ 25 Billion Price

[ad_1]

In the week that saw bitcoin hit a new all-time high, investors and financial professionals have been busy in an exciting week for cryptocurrencies.

A big step in the regulation of crypto in the United States has restored confidence to traders in the future of digital assets, although the environmental problems associated with them continue to accumulate.

In case you missed any, here are the five biggest things that happened in crypto this week.

Bitcoin on the moon when ProShares debuted

Bitcoin hit a new all-time high of over $ 66,000 this week, strengthening investors after the first exchange-traded fund based on bitcoin futures hit the US stock market.

The world’s largest cryptocurrency by market cap peaked at nearly $ 67,000 on October 20, improving its previous high of $ 64,894 reached in April.

It then lost some of those gains to stand at around $ 63,000 at 11 a.m. in London on October 22, as hype about ProShares’ bitcoin futures ETF debut earlier in the week s ‘Is calm. Its total size was nearly $ 1.2 trillion, according to CoinMarketCap.

READ Three charts to show how the bitcoin record took the crypto market by storm

The United States Securities and Exchange Commission approved the ProShares product late last week, marking the first time that investors could access a bitcoin-linked (albeit based on futures) fund in the markets. American audiences.

Traders are now waiting for approval deadlines for spot bitcoin ETFs next month, which will more closely track the price of physical bitcoin.

FTX crypto exchange hits $ 25 billion valuation

The FTX cryptocurrency exchange reached a valuation of $ 25 billion in a new funding round this week that included heavyweights such as the Ontario Teachers’ Pension Plan and funds managed by BlackRock, as well as pillars of digital assets.

FTX Trading, the exchange’s parent company, said on Oct. 21 it had raised just over $ 420 million in the new round from a cohort of 69 investors. The news came three months after FTX closed a previous round at a valuation of $ 18 billion.

Singapore sovereign wealth fund Temasek has joined the new round of funding, alongside Silicon Valley venture capitalists Sequoia Capital – an existing investor in FTX – and IVP.

READ FTX Cryptocurrency Exchange Hits $ 25 Billion Valuation In Funding Round

Other investors included New York-based Tiger Global Management and Iconiq Growth, a subsidiary of Iconiq Capital, which managed money for Mark Zuckerberg and other tech billionaires.

Support from leading investors is a vote of confidence in FTX, which has grown rapidly since it began operations in 2019. FTX on average processed nearly $ 13 billion in transactions every day in October, this year. which makes it the third largest crypto exchange in the world by volume. .

Its CEO and co-founder, Sam Bankman-Fried, is widely recognized as the richest person in crypto. His personal net worth was last valued at $ 26.5 billion, according to Forbes.

Kazakhstan to limit bitcoin miners after China ban

Kazakhstan is suffering under the weight of power outages after becoming a popular destination for bitcoin miners, thanks to China’s ban on the practice.

The country’s Energy Ministry plans to limit the electricity consumption of its crypto-mining industry to a total of 100 megawatts in a bid to limit power shortages, CoinDesk reported this week, citing a draft of ministerial decree published on October 1.

All newly licensed plants will be limited to 1 MW over the next two years, according to Energy Minister Magzum Maratuly Myrzagaliev. Depending on the equipment used, it takes around 100 MW to mine a single bitcoin.

Kazakhstan is the second-largest contributor to the bitcoin network following a decision by the Chinese government to crack down on mining, according to data collected by the University of Cambridge.

Bitcoin mining in Kazakhstan accounted for 18% of the global hashrate at the end of August, the university’s Center for Alternative Finance said, referring to a metric that measures total Bitcoin mining output.

About 76% of companies that mine proof of work cryptocurrencies combine green and fossil energy sources, but less than 40% of the total energy used to mine bitcoin and other cryptocurrencies comes from sources renewable.

FOMO drives crypto craze in UK

Young people are flocking to high-risk markets like cryptocurrencies because they see investing as competition with their peers, the UK’s top financial regulator suggested this week.

Three-quarters of those under 40 who have invested in high-risk commodities such as crypto and foreign exchange say they are motivated by rivalry with friends, family and acquaintances, according to a survey of 1,000 investors by the Financial Conduct Authority.

While the pandemic has led a new generation of traders to seek out digital investing apps, the October 20 survey also shows that 58% let the hype on social media and in the news guide their investment decisions, claiming that constant reminders from others had encouraged them to stack up in a specific investment.

READ Peer rivalry drives young people to craze for crypto and memes

“The FCA has been nervous for some time about the number of retail investors who risk their money in the crypto realm. He is now worried that the volatile nature of coins and tokens is exploding in the face of the financial sector with more and more institutions, ”said Susannah Streeter, senior investment analyst at Hargreaves Lansdown.

“Giving crypto assets a high risk price can help limit contagion if they drop sharply in value, but central banks and regulators are on a delicate tightrope. If the new rules are too strict, they risk destroying innovation in the rapidly evolving world of decentralized finance.

“If investors are feeling the FOMO effect, they should only touch cryptocurrencies at the edges of their portfolios with money they can afford to lose.”

Paul Tudor Jones backs bitcoin against gold

British billionaire Paul Tudor Jones said this week that he prefers cryptocurrencies as an inflation hedge in his gold portfolio.

Speaking to CNBC’s Squawk Box, the hedge fund manager said, “That would be my favorite over gold right now… Obviously, there is a place for crypto. Clearly, it is. winning the race against gold right now.

However, the percentage of crypto holdings in his portfolio is low, falling in the “single digits”.

He was speaking as bitcoin hit its all-time high the day after ProShares debut. Jones also said he was very concerned about rising inflation, saying the US Federal Reserve is currently implementing the worst monetary policy he has seen in his lifetime.

“I think for me the number one problem facing Main Street investors is inflation, and it’s pretty clear to me that inflation is not transient,” Jones said in the interview with the October 20. “This is probably the biggest threat to, certainly, the financial markets and I think to society in general.”

He argued that demand is heavily skewing the US landscape right now, which could be reinvested in cryptocurrencies among other assets to address the issue.

“Inflation can be much worse than we fear. We have the demand side of the equation… and that’s $ 3.5 billion more than it normally would… just sitting in liquid deposits, ”Jones added.

“They can go into stocks, or cryptocurrencies, or real estate, or be consumed, so it’s a huge amount of dry powder waiting to be used at some point, which is why inflation is not going away. “

To contact the author of this story with comments or news, email Emily Nicolle

[ad_2]