Daily crypto news alerts for 22nd December, 2020
🗞Grayscale has stopped deposits in its bitcoin trust. JPMorgan considers this signal for correction
Asset manager Grayscale Investments LLC has stopped accepting deposits into his Bitcoin-based trust. A notice of this appeared on Monday on a dedicated page on the Grayscale website. Investments in trusts based on Bitcoin Cash, Ethereum, Ethereum Classic, Litecoin and a large-cap digital asset fund were also closed. Investments in Horizen Trusts, XRP, Stellar Lumens and Zcash are still available.
Grayscale periodically restricts the issuance of shares in its trusts. This happened repeatedly in the fourth quarter of 2019. As a result, the shares of the trusts remain available for trading in the secondary market, however, it is no longer possible to invest in cryptocurrency directly through Grayscale and issue new securities.
Just prior to today's notice, JPMorgan Bank analysts released a note in which they wrote that reducing inflows to the Grayscale trust could increase the likelihood of a correction in the bitcoin market. The authors note that the demand of institutional investors from among Grayscale clients is currently too high to allow negative dynamics to form, but the market is already overheated, so their further actions may become an important factor in shaping the trend.
Over the year, the Grayscale bitcoin trust has grown from $ 2 billion to over $ 13 billion and has concentrated about 3% of all existing cryptocurrency coins. How long the current situation will last is unknown. According to some versions, the trusts were closed due to high demand and the resulting queue, due to which the investment process stretches for several weeks.
It is noteworthy that only today Grayscale announced a decrease in the management fee for the Digital Large Cap Fund from 3% to 2.5%. The company notes that "in this historic year" investors are seeking to diversify not only their traditional digital assets, but also within the cryptocurrency sector itself. The fund allows you to invest in Bitcoin, Ethereum XRP, Bitcoin Cash and Litecoin at the same time.
“Grayscale has been the market leader in digital currency investment products since its inception. It is imperative for us that as the industry continues to evolve, Grayscale leads the way in customer service and offering, ”said Michael Sonnenschein, Managing Director of Grayscale Investments.
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🗞XRP Loses 15% Amid SEC-Pending Lawsuit Against Ripple
The US Securities and Exchange Commission (SEC) is preparing to file a lawsuit against the fintech company Ripple on charges of selling unregistered securities. Fortune writes about this with reference to a statement by Ripple CEO Brad Garlinghouse. In addition to Ripple, Garlinghouse himself is expected to be named as a defendant, as well as co-founder Chris Larsen.
The question of whether XRP is a security and whether Ripple will be prosecuted by the SEC because of the cryptocurrency it created has been of interest to market participants for a long time. Garlinghouse previously admitted that the administration of US President-elect Joe Biden would potentially turn out to be more friendly towards the cryptocurrency industry, so Ripple's advance notice of the SEC-prepared act could include a political component, Fortune suggests.
Garlinghouse criticized the SEC for the decision to file a lawsuit ahead of the holiday weekend, while its chairman Jay Clayton prepares to step down. “It's not just at the Grinch level, it's shocking. This is an attack on the entire cryptocurrency industry and innovation in the United States. Clayton did it with one foot outside the door. He acted rather shamefully by deciding to sue Ripple and leaving all the legal work to the next chairman, ”Garlinghouse said.
SEC officials have previously admitted that Bitcoin and Ethereum are not securities, primarily because there is no person or company to control them. In addition, they are released gradually through mining. XRP is different from them, as Larsen and others issued 100 billion XRP at once in 2012 through Ripple Labs and have sold them over the following years.
Ripple flatly rejects claims that XRP is a security. Seeing XRP as a security is akin to equating oil with Exxon, Garlinghouse said.
“I think we have to stand up for the whole crypto and not let the SEC put pressure on the whole industry. We will be on the right side of the story, ”he added.
He also distinguished between "communist China-made Bitcoin and Ethereum and the American company Ripple." “Chairman Jay Clayton, in his latest act, selects winners and tries to limit innovation in the cryptocurrency industry to BTC and ETH. Ripple uses XRP and will continue to do so as it is the best digital asset for payments. We are ready to fight and win. This battle is just the beginning, "Garlinghouse wrote on Twitter.
In June, Christopher Giancarlo, the former chairman of the US Commodity Futures Trading Commission (CFTC), published his own analysis of XRP status, in which he tried to prove on several points why cryptocurrency is not a security.
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🗞How to choose the right moment to invest in cryptocurrency?
The cryptocurrency market is characterized by high volatility and instability. For successful trading, traders need to understand when to enter the market, and when it is better to wait for a more opportune moment.
In order to choose the most suitable moment to buy cryptocurrency, you need to consider several key factors:
Trading volume
Along with the circulating supply and market capitalization, volume is one of the most important metrics in the crypto market.
For traders, volume serves as an indicator of the stability of an asset. A sharp rise in prices while volume is low can be manipulation. A drop with significant volume could mean that the coin is in for an extended bear run. High volumes make the asset more liquid.
There is no certainty in cryptocurrency, but effective volume estimation is an important tool at the investor's disposal.
Market capitalization
Market capitalization is a well-known and important metric that offers a quick way to assess the value of a coin. Coins with small market caps are much more prone to volatility and market manipulation.
Trading instruments
Use trading investment planning and risk minimization tools such as stop loss and take profit.
Stop loss limits the possible loss. He specifies a certain price as a stop loss (SL), upon reaching which the trade will be closed automatically. Take profit is the exact opposite. It tells you how much the trader plans to make a profit from one trade, and closes it as soon as the amount matches the declared one.
Time of purchase
Buying low, selling high is not a new concept. As oil tycoon Paul Getty once said, "Buy when everyone sells and hold until everyone buys."
When the price drops sharply, this is considered the best time to buy. The difficulty lies in determining whether the price has reached its bottom. It is difficult to determine, so if the price of an asset is constantly falling, it is better to buy it in parts.
This is called averaging down. You can buy a certain amount of cryptocurrency this week and leave some of the funds to buy next week. If the price falls again, the trader will benefit as his average price will be lower. This will work in the investor's favor and minimize the risks.
Global instability
Geopolitics plays an important role in each individual market, and sometimes serves as the main driver of global price movement for the young cryptocurrency market. So the COVID-19 pandemic, announced in March this year, has collapsed the price of military-technical cooperation by more than 50%.
Technical analysis of cryptocurrencies
Technical analysis is the study of statistical trends collected from historical price and volume data to predict future asset price movements.
Technical analysis does not analyze the fundamentals of an asset, but focuses on charting and using technical indicators to better predict the likelihood of short, medium and long term trends based on historical and current price and volume data. Technical analysis is not about certainty, but about looking for future probabilities based on past trends. However, in combination with other market indicators, it can suggest a good time to enter the cryptocurrency market.
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🗞Ethereum developer: "after the implementation of EIP-1559, ether will be burned in every transaction"
Developer Eric Conner has announced the upcoming implementation of the EIP-1559 Ethereum enhancement. It provides for the burning of ETH when paying commissions.
EIP-1559 will improve user experience, enhance network security, and increase block size as needed. After its implementation, new ETH coins will no longer be issued. In addition, EIP-1559 will lead to the destruction of a large number of ethers. They will be burned after every transaction processed on the Ethereum blockchain, which is very different from the current mechanism.
Today, Ethereum has the ability to manually set gas charges. Therefore, some users may increase the commission so that the miners process their transaction faster. As a result, two serious problems arise: network congestion and "sky-high" fees for transactions in Ethereum.
EIP-1559 will make an important change, Conner said. The network will automatically offer a base fee (“BASEFEE”) based on network activity to optimize the speed of all transactions and prevent blockchain clogging. Most of the ethers will be burned when gas is consumed. As a result, the number of coins will start to decrease and their supply will become limited.
Despite the bright prospects, EIP-1559 could eventually destroy all existing ethers. However, the improvement can only be implemented on the existing Ethereum network using the Proof-of-Work consensus method. Ethereum has already begun its transition to Proof-of-Stake (proof of stake). On December 1, within the framework of the zero phase, the "signal chain" (Beacon Chain) was launched.
As the next phases of Ethereum 2.0 roll out, miners will give way to stakers using their own nodes to confirm transactions on the network. Unsurprisingly, miners previously did not approve of the new fee model when implementing EIP 1559.
