Industry Weekly Report | Miners hold more than 1.82 million Bitcoins, SEC lowers investment threshold, Fidelity plans new BTC fund

OKEx Intelligence Bureau's weekly industry report helps you quickly review industry dynamics and clarify industry trends.

Table of contents:

• Market Overview

• Cryptocurrency Market

• Wall Street Crypto News

• DeFi Ecosystem

• Industry Voice

• Blockchain industry empowerment

• Industry anecdotes

Market Overview

According to CoinGecko data, as of 17:00 on August 28, 2020, the total market value of the cryptocurrency market was 370.3 billion US dollars, and the total market value fell by 2.5% in 7 days. The market sentiment index was 74, and the level was greedy; the USDT premium rate was +0.006189%, and the average over-the-counter price was ¥6.91.

According to OKEx spot, as of 17:00 on August 28, BTC was temporarily reported at $11,424.5, down 3.3% in 7 days, and OKB was temporarily reported at $5.473-5.468. The long-short position ratio of OKEx BTC contract was 1.23, with the number of long parties in the market dominating; the total contract position was 1.095-983 billion US dollars, down 9.4% from last week.

1. Cryptocurrency Market

1. The number of bitcoins held by miners exceeds 1.82 million , a record high in the past two years

On August 28, Glassnode data showed that miners currently hold more than 1.82 million bitcoins, a two-year high and continuing a clear upward trend that began in September 2019. In the past year alone, miners' total holdings have increased by about 2%, excluding other Bitcoin miners that Glassnode cannot track.

[Interpretation] On the one hand, it shows that miners are optimistic about the future market, and on the other hand, it is caused by the high cost of mining. In its latest report issued in August, Grayscale considered the indicator "The ratio between Bitcoin's price and its production" and found that the current profitability of mining is low, and it is inclined to hold the currency and wait for the price to rise.

2. Switzerland's largest online retailer Digitec Galaxus may support stablecoin payments

On August 27, Invezz reported that Digitec Galaxus, the largest online retailer in Switzerland, recently began testing crypto transactions for bank-issued stablecoins. The DCHF stablecoin is issued by Sygnum Bank of Switzerland. Currently, Digitex Galaxus seems to be experimenting with it, and it may be accepted as a payment method in the near future, along with Bitcoin and some altcoins. As reported in March 2019, Digitec Galaxus has begun accepting cryptocurrency payments. In addition to BTC, it also accepts BCH, BSV, ETH, XRP, BNB, LTC, TRX, OMG, NEO and other payments. When users select the "cryptocurrency" option when paying, the website will jump to Coinify's payment website, and Coinify will charge a 1.5% transaction fee.

[Interpretation] Digitec Galaxus is the largest online retailer in Switzerland, with an annual turnover of 750 million euros. Germany's Zalando and the US e-commerce giant Amazon rank second and third respectively. Is cryptocurrency payment really the general trend? Previously, Tim Draper, a senior Wall Street investor, predicted that Bitcoin and other cryptocurrencies will become the main means of payment within five years. Is his prediction likely to happen in a few years? We will have to wait and see.

3. Fidelity Investment Report: Bitcoin scarcity will exceed gold in 2025

A recent report released by Fidelity Investments in the United States shows that Bitcoin's S2F (stock/increment) ratio in 2021 will be close to that of gold, and by 2025 this figure will exceed that of gold, which means that in 2025, after Bitcoin completes another halving, Bitcoin's scarcity will surpass that of gold. PlanB tweeted that it is very interesting to see Fidelity's views on Bitcoin and S2F: "Commodities with high S2F have always been high-level stores of value. After the next halving (2024), Bitcoin's S2F will exceed that of gold."

[Interpretation] Coincidentally, Grayscale also mentioned Bitcoin's value storage attributes many times in its latest report "Valuing Bitcoin", and believed that "in this unprecedented monetary and fiscal stimulus, investors are looking for various ways to resist the negative impact of inflation. Due to the uniqueness of Bitcoin, such as its scarcity and unique issuance mechanism, we believe it can become a means of storing value and resisting inflation." In addition, in the "Value Storage Score Table" given by Paul Tudor Jones and his partners, Bitcoin scored 43 points, which is 69% of the overall score of gold, but its market value is only 1/60 of gold. Paul Tudor Jones believes that Bitcoin seems to be undervalued.

2. Wall Street Crypto News

1. SEC revised the rules and lowered the investment threshold. Anyone with a "license" can participate

On the evening of August 26, the U.S. Securities and Exchange Commission (SEC) officially announced that it would expand the definition of qualified investors by revising the rules to include individuals and some institutional investors who do not meet the financial requirements but have professional knowledge into the category of "qualified investors."

Specifically, the most important point is that the SEC has included investors with certain professional certificates, titles, qualifications or other certificates issued by recognized educational institutions and "knowledgeable employees" of private equity funds in the new definition of "qualified investors". It is reported that the revised rules will take effect 60 days after the date of publication.

[Interpretation] Previously, the SEC's rigid regulations on "qualified investors" were mainly reflected in the financial aspect, such as individuals with a net worth of more than $1 million or an income of more than $200,000 in the past two years, and institutional investors with assets of more than $5 million. Therefore, under this regulation, only a few wealthy people in the United States can invest in Bitcoin derivatives, such as Bakkt, CME, Grayscale, etc., which are only open to qualified investors, and it is almost difficult for ordinary investors to participate. This time, the SEC has broken down the rigid financial barriers and taken the investors' knowledge background and maturity into consideration, which can be regarded as a major breakthrough. This move has expanded the market's access conditions and will have a significant impact on the crypto market in the long run.

2. Forbes: The Fed’s new policy may be good for Bitcoin

On August 25, Federal Reserve Chairman Powell signaled a higher tolerance for inflation, including the Fed's largest inflation move ever on August 27. Although the specific details are still unclear, the new policy may not be conducive to the long-term strength of the US dollar. If Powell implements a "bazooka" policy to curb inflation, the bullish implications for Bitcoin in recent months have become obvious. "Since the beginning of the year, Bitcoin's gains in US dollar terms have been greater than those of other currencies such as the euro and the yen, indicating that Bitcoin's recent gains have been driven primarily by a broad sell-off in the US dollar," said analyst Omkar Godbole.

[Interpretation] Increasing tolerance for inflation means that the financial market will continue to move in the direction of high inflation, which will inevitably have a negative impact on the strong position of the US dollar, which will be beneficial to Bitcoin in the long run.

3. Fidelity’s broker-dealer plans to launch a new Bitcoin fund with a minimum investment of $100,000

Recently, according to documents from the U.S. Securities and Exchange Commission (SEC), Fidelity Brokerage Services, a brokerage dealer under asset management giant Fidelity, launched a Bitcoin index fund called Wise Origin. The fund issuer is Peter Jubber, head of Fidelity investment strategy and planning. The minimum investment amount is US$100,000 and the issuance time is expected to be more than one year, but the specific issuance scale and fundraising information have not yet been disclosed.

[Interpretation] Fidelity Investment Group is a multinational financial services company headquartered in Boston, USA, with more than $2.4 trillion in assets under management, and many of its institutions are involved in crypto business. For example, in June this year, investment company Wilshire Phoenix approved Fidelity Digital Assets, a subsidiary of Fidelity, to become the custodian of its new Bitcoin Trust Fund.

3. DeFi Ecosystem

1. ZeusCapital shorted LINK again, calling LINK a modern version of the tulip bubble

On August 24, ZeusCapital published a short article saying that the LINK ecosystem is a modern version of the Dutch tulip bubble for the following reasons: 1. The price of LINK should be driven by the node supplier's support or sale, but in fact its price is determined by SmartContract, the company behind Chainlink. 2. LINK is overvalued, using equity rewards instead of dividend yields. The actual value of LINK is between 25 cents and 50 cents. 3. The initial investment for each computer of the Chainlink node is less than $300. If calculated by cost, the true value of LINK should be less than 5 cents. 4. The current price of LINK is the result of unreasonable speculation and a series of market operations. Now Chainlink GitHub has about 200,000 lines of code. According to the current valuation, each line of code is $17,500. Earlier news, in early August, Zeus Capital published a report on LINK and shorted LINK in the market.

[Interpretation] Zeus Capital is a British asset management company. In early August, Zeus Capital shorted LINK. On the one hand, it borrowed a large amount of LINK on the lending platform to sell in the market. On the other hand, it issued a report claiming that LINK was a pump-and-dump plan and a "fraud" project. As a result, it suffered heavy losses and lost 10 million US dollars. Now this institution has made a comeback. I wonder if it can "get what it wants" this time?

2. 1inch: Many of the newly launched DeFis are Ponzi schemes, and governance tokens do not have governance rights.

On August 23, the decentralized exchange 1inch tweeted, why would the DeFi community prefer to own 80% of "totally worthless" tokens rather than 20% of actual utility tokens with unique tokenology (TBA)? Few people know that many of the new DeFis that have been launched recently are Ponzi schemes, and (the so-called governance tokens) have no governance rights.

[Interpretation] "Governance tokens do not have governance rights" means that token holders have the power to intervene in major project decisions, which is the original intention of DeFi projects to issue tokens. If they do not have such attributes, it means that they are likely to develop in the direction of a Ponzi scheme. In addition, security audits in the Defi field are very important. If funds are deposited in unaudited contracts and then rushed into market transactions, it will be very dangerous. For example, the vulnerability of the YAM project has caused significant losses to investors.

3. LongHash: Decentralized exchanges are gradually emerging

On the evening of August 24, LongHash tweeted that decentralized exchanges are gradually emerging. At the beginning of 2020, the number of tokens locked in lending projects accounted for 67.98% of all DeFi projects, but recently this figure has dropped to 52.92%; at the same time, the proportion of locked tokens in DEXs projects has soared from 2.92% to 24.52%.

[Interpretation] The value of tokens locked in DEX has soared to US$1.96 billion.

4. Industry Voice

1. Gemini co-founder: Most of the support for Bitcoin prices comes from the Federal Reserve itself

According to Cointelegraph on August 26, Gemini co-founder Tyler Winklevoss said that most of the price support for Bitcoin (BTC) comes from the Federal Reserve itself, and the Fed's policies will continue to support and affect the fate of Bitcoin. A series of containment measures for the new crown epidemic have had an impact on the US economy. The US central bank will make Bitcoin more attractive, while the attractiveness of the US dollar has declined. Tyler Winklevoss believes that Bitcoin may surpass gold and become the leading safe-haven asset in the global market. The current market value of gold is estimated at US$9 trillion, while the market value of Bitcoin is about US$200 billion, which may bring a 45-fold increase, so he firmly believes that Bitcoin will reach the target of US$500,000 in the ultimate bull market.

[Interpretation] The following figure shows the weekly expansion of the Federal Reserve's balance sheet. Since the implementation of the fourth round of QE in 2018, the balance sheet of the Federal Reserve Bank (FED) has increased from $1 trillion in 2008 to $4 trillion in 2014. As the economy shows signs of strength, the Fed plans to reverse this expansionary stance. However, when the Fed tried to shrink its balance sheet in 2018, the market immediately gave unfavorable feedback. The S&P 500 fell 20% in just three months. In other words, the US economy is deeply tied to the Fed's balance sheet. At the same time, under the impact of the 2020 COVID-19 pandemic, the balance sheet of the Federal Reserve Bank of the United States has soared to $7 trillion, and the huge amount of currency has caused the prices of many assets to soar. Therefore, it is not unreasonable for Tyler Winklevoss to say that "most of the support for Bitcoin prices comes from the Federal Reserve itself."

2. Analyst PlanB: As the velocity of money in the United States plummets, Bitcoin is expected to reach $288,000

According to Cointelegraph on August 25, Jeroen Blokland, a portfolio manager at asset management company Robeco, pointed out that the M2 money circulation velocity in the United States has hit a historic low. In the view of cryptocurrency analyst PlanB, the plunge in money circulation velocity will only accelerate Bitcoin in the direction of his recent prediction, that is, it will reach an average of $288,000 by 2024.

[Interpretation] The higher the currency circulation velocity, the higher the currency efficiency and the higher the wealth circulation efficiency, which means the speed and speed at which society creates wealth will also be higher, and debts will be repaid. On the contrary, when the currency efficiency decreases, the society's wealth creation ability will decrease, and debts cannot be repaid. No matter how much currency the central bank issues, it will be difficult to change the situation of high debt in various economic links. At this time, capital will inevitably look for new and efficient investment channels, such as Bitcoin, which is another favorable factor in promoting the rise in Bitcoin prices.

5. Blockchain Industry Empowerment

1. Beijing Digital Currency Research Center was established in Beijing

According to Xinhuanet, the Beijing Digital Currency Research Center was established in Beijing on August 26. In order to comply with the global technological innovation trend characterized by digitalization, networking, and intelligence, better grasp the theory and practice of digital currency, track and produce cutting-edge research results in the digital economy, and serve the cultivation of "new business" talents and the economic and social development of Beijing, the School of Business of Beijing Union University, Zhengdao Think Tank, and the China Banking Research Center of the Central University of Finance and Economics jointly established the "Beijing Digital Currency Research Center" (Beijing Institute of Digital Currency). Jiang Jingjing, director of the Beijing Digital Currency Research Center, said that the Beijing Digital Currency Research Center focuses on research on "digital currency" and will be committed to carrying out the "Digital Currency Inclusive Action" as a "seeder" and "propagandist" in the field of domestic digital currency.

2. Li Lihui: The scope of the digital currency pilot may be further expanded this year or early next year

China Daily recently interviewed Li Lihui, former president of the Bank of China and head of the blockchain research group of the China Internet Finance Association. Li Lihui said that from the current pilot situation, some small-scale application scenarios have been verified and there are public cases. However, the scope of the pilot is still relatively small, involving a small number of people, and it may take some time to truly expand the scope of the pilot. Judging from the degree of progress, it is possible to further expand the scope of the digital currency pilot this year or early next year, but whether it can be quickly promoted to the whole country remains to be seen.

3. Two American technology companies are researching blockchain-based communication solutions for NASA

According to CoinDesk on August 26, two American technology companies, Orbit Logic and Fraunhofer Center for Experimental Software Engineering, have won $124,800 in funding from NASA to build "Blockchain Ledgering Space Communications Reconstruction and Mapping", or SCRAMBL for short. This is a blockchain-based communication solution that they believe has potential for NASA's quadcopter swarms.

6. Industry Anecdotes

1. The US government demands the recapture of 280 cryptocurrency accounts associated with North Korean hackers

On August 28, according to Jinshi News, the U.S. government filed a lawsuit to try to seize control of 280 Bitcoin and Ethereum accounts, which are believed to hold funds stolen by North Korean hackers from two cryptocurrency exchanges. As stated in the complaint, in July 2019, hackers linked to North Korea hacked into a virtual currency exchange. Hackers stole more than $272,000 worth of alternative cryptocurrencies and tokens, including Proton, PlayGame, and IHT Real Estate Protocol tokens. In the following months, the funds were laundered through multiple intermediary addresses and other virtual currency exchanges. In addition, in September 2019, a U.S. company was hacked in a related incident. Hackers associated with North Korea stole nearly $2.5 million and laundered it through more than 100 accounts at another virtual currency exchange. The U.S. government hopes to formally control these accounts so that the funds can be returned to the hacked exchanges or users.

[Interpretation] Unless the FBI arrests the person personally, the coins will never be recovered as long as the private key is still in the hands of the hacker.

2. The International Monetary Fund’s official Twitter account released a video on cryptocurrency

On August 24, the official Twitter account of the International Monetary Fund (IMF) released a video about cryptocurrency, titled "What is cryptocurrency?" In this video, the host compared traditional bank and credit card payments with cryptocurrency payments, and concluded that cryptocurrency is cheaper, more timely, and can protect user privacy. It is reported that the video was originally released in June 2018.

[Interpretation] The International Monetary Fund (IMF) was established in Washington on December 27, 1945, in accordance with the Agreement of the International Monetary Fund signed at the Bretton Woods Conference in July 1944. It was established at the same time as the World Bank and is listed as the world's two major financial institutions. Its responsibilities are to monitor currency exchange rates and trade conditions of various countries, provide technical and financial assistance, and ensure the normal operation of the global financial system. After the video was released, it received more than 2,000 likes and 1,400 reposts, with strong backlash.

3. Google outsourcing company employees stole Google shopping cards to exchange for Bitcoin

According to Cointelegraph on August 24, Google confirmed that it had transferred some of the work outsourced to Sykes Philippines to another supplier in the Philippines. It is alleged that some of the company's employees stole about 60 million Philippine pesos (about 1.23 million US dollars) in Google shopping cards and exchanged them for Bitcoin. In response, Sykes confirmed that it did find that employees violated the code of conduct, but did not mention what these violations were.

[Interpretation] No matter how optimistic you are about cryptocurrency, you must obtain it through legal channels.

4. The University of Utah may have paid nearly $500,000 to the ransomware gang in Bitcoin

According to Decrypt on August 22, the University of Utah paid nearly $500,000 to a ransomware gang to avoid having its data encrypted and leaked. It is the latest victim of a recent series of ransomware attacks against higher education. The university said in a statement on its website on Thursday that it was attacked by ransomware on July 19 and hackers only encrypted 0.02% of the data stored on its servers. The university did not specify whether the funds were paid in cash or cryptocurrency. But Brett Callow, an analyst at malware lab Emsisoft, said that the operators of the NetWalker ransomware are likely behind the attack and they may ask for Bitcoin.

[Interpretation] A recent investigation shows that in the months of the COVID-19 pandemic, the ransomware NetWalker extorted 2,795 bitcoins worth $25 million from victims, of which as many as 640 bitcoins were stored in SegWit's cold wallets.