Bitcoin climbs to 9-month high as bank turmoil sparks rally

LONDON/HONG KONG  -Bitcoin climbed to a nine-month high on Monday as turmoil in the banking sector drives some investors to turn to digital assets, as the cryptocurrency built on its best week in four years.

The biggest cryptocurrency rose as far as $28,567, its highest since mid-June, and was last up 0.9 percent, amid growing expectations that central banks would slow the pace of interest rate hikes.

Bitcoin rose 26 percent last week, its best weekly gain since April 2019, and has soared some 40 percent in 10 days as turmoil in the banking sector rippled around the globe – culminating, so far, in UBS Group’s takeover of rival Credit Suisse Group AG over the weekend.

Traditional assets such as banking stocks and bonds plummeted on Monday after UBS sealed its state-backed takeover of Credit Suisse, a deal orchestrated in an attempt to restore confidence in a battered sector.

Top central banks, faced with the risk of a fast-moving loss of confidence in the stability of the financial system, moved on Sunday to bolster the flow of cash around the world. Such a global response has not seen since the height of the COVID-19 pandemic.

“Its stunning rally is the result of the banking crisis, and as the interest rate markets prices in rate cuts in the second half of 2023,” said Tony Sycamore, an analyst at IG Markets, predicting a move towards $32,000 should bitcoin hold above the key support level about $25,000.

Other market players predicted that bitcoin would benefit from central bank efforts to bolster liquidity in the global financial system. It rose to a record of $69,000 in November 2021 after central banks and governments launched unprecedented monetary and fiscal stimulus measures.

“The momentum is all driven by liquidity,” said Markus Thielson at digital asset firm Matrixport in Singapore.

-reuters

Ronin's $615 million crypto heist

LONDON - Hackers have stolen cryptocurrency worth almost $615 million from a blockchain project linked to the popular online game Axie Infinity, the latest cyberheist to hit the digital asset sector.

Ronin, a blockchain network that lets users transfer crypto in and out of the game, said on Tuesday the theft happened on March 23 but was not detected until almost a week later. Read full story

Here's what you need to know about the Ronin heist.

CRYPTO'S A BIG DEAL NOW, RIGHT?

Indeed.

Bitcoin and other digital currencies have exploded into public view in recent years, with mainstream investors embracing the sector in droves during the COVID-19 pandemic.

The sector's now worth over $2.1 trillion. As money has poured in, the hacks and heists that have long plagued crypto have also grown also size. 

AND HOW DOES RONIN FIT IN?

Ronin is used in Axie Infinity, one of the world's most popular online games involving cryptocurrencies.

Its products include a digital wallet for storing crypto, and a "bridge" that allows users to move funds in and out of the game. This is where the crypto were stolen from.

Ronin takes its name from the samurai warriors of feudal Japan who did not serve any particular lord. The name "represents our desire to take the destiny of our product into our own hands," Axie Infinity said in a blog post.

Vietnam-based Sky Mavis, which launched Axie Infinity in 2018, did not respond to multiple requests for comment. Ronin also did not return Reuters' messages.

Jeffrey Zirlin, one of Axie Infinity's founders, said at a conference on Tuesday: "It is one of the bigger hacks in history and we're fully committed to continue building."

HOW DID THE HEIST HAPPEN?

The Ronin hacker used stolen private keys - the passwords needed to access crypto funds - Ronin said in a blog post, after targeting computers connected to its network that help confirm transactions.

Ronin said it discovered the hack on Tuesday and that it was working with "various government agencies to ensure the criminals get brought to justice".

The identity of the hackers is still unclear.

AND AXIE INFINITY?

Axie Infinity says it has 2.8 million daily active players, with some $3.6 billion previously traded on its marketplace, making it one of the most popular blockchain-based online games.

Set in a fictional universe, players can collect, trade and play with virtual creatures called Axies, which are traded in the form of non-fungible tokens (NFTs) and sell for hundreds of thousands of dollars.

It is the largest NFT brand by all-time sales volume, according to market tracker CryptoSlam.

The game has attracted venture capital funding, raising $152 million in October from investors including Andreessen Horowitz.

Axie and other "play-to-earn" games allow players to spend crypto and earn financial rewards. They have surged in popularity in the past year, as a frenzy in the NFT world prompted investors to speculate in the hope of large returns.

WHERE'S THE LOOT NOW? AND ARE USERS AFFECTED?

Most of the stolen funds are still in a digital wallet, which is available to view.

Blockchain Intelligence Group, a Vancouver-based crypto tracker, said that the hackers had moved a small amount of the funds to major exchanges FTX, Crypto.com and Huobi.

Huobi said it was investigating the hack and communicating closely with Axie Infinity. FTX and Crypto.com did not immediately responded to requests for comment.

Ronin said in a blogpost that Sky Mavis was "committed to ensuring that all of the drained funds are recovered or reimbursed," without giving details. Making sure there is no loss of funds "is our top priority", it added.

It said it was working with major blockchain tracker Chainalysis to trace the stolen funds. Chainalysis declined to comment.

-reuters

Bitcoin holds ground after touching highest this year

LONDON - Bitcoin held ground just below its highest this year, touched a day earlier, with gains for the original cryptocurrency topping 27 percent since Russia's invasion of Ukraine.

Bitcoin hit $48,234 on Monday evening, its highest since Dec. 31. It was last trading up 0.9 percent at $47,553.

Its gains lifted smaller cryptocurrencies that tend to move in tandem with bitcoin. Ether, the second biggest token, hit $3,436 on Monday, its highest since early January.

Market players cited emerging signs of a new wave of adoption of crypto by institutional investors and financial firms, whose interest over the past two years has fuelled crypto's journey to mainstream asset from niche technology.

Bitcoin has risen over 12 percent in the last week alone.

Among supportive comments cited were those by BlackRock Inc's chief executive, who said last week that the Russia-Ukraine war could end up accelerating digital currencies as a tool to settle international transactions.

Such moves signal "growing conviction that the crypto markets are worth dedicating more resources to," said Noelle Acheson, head of market insights at US crypto firm Genesis.

Though bitcoin and other cryptocurrencies are now spoken of in the same breath as traditional assets from stocks and foreign exchange to bonds, its remains as volatile as ever.

Bitcoin hit an all-time high of $69,000 in November, before tumbling almost 30 percent in just 24 days.

-reuters

Crypto market value tops $3 trillion for first time

LONDON - The world cryptocurrency market is worth more than $3 trillion for the first time, according to calculations Monday, as mainstream investors increasingly jump on board.

The value has reached $3.007 trillion (2.6 trillion euros), said CoinGecko, which tracks prices of more than 10,000 cryptocurrencies.

"The crypto market is growing at a mind-blowing speed," noted SwissQuote analyst Ipek Ozkardeskaya.

"A part of it is speculation of course, but a part of it is real," she told AFP.

"Crypto is now making its way to traditional finance and everyone is on board."

Bitcoin, the world's biggest cryptocurrency, hit a record-high $66,000 last month after taking another step towards mainstream status.

It surged back above $66,000 on Monday close to its all-time peak after a five percent jump.

Ethereum, the second biggest cryptocurrency by market value, hit a record high $4,768 on Monday.

A bitcoin futures exchange-traded fund, a type of financial instrument, launched on the New York Stock Exchange in October.

The ETF is a more accessible vehicle that puts bitcoin within the grasp of even more investors.

Some investors sees cryptocurrencies as a hedge against inflation, which is surging worldwide as economies reopen after pandemic lockdowns.

"Bitcoin is bouncing higher again, close to all-time highs," Hargreaves Lansdown market analyst Susannah Streeter said Monday.

"The recent surge in the crypto... partly seems to have been caused by investors piling in, seeing it as a hedge against inflation," Streeter added. 

No more than 21 million bitcoin can be created, helping its price to trade way above its rivals, but trading of cryptocurrencies in general has shown to be extremely volatile with massive price swings a common occurrence.

Agence France-Presse

Equity markets and oil bounce back after last week's tumble

HONG KONG - Stocks and oil rallied Monday on bargain-buying after last week's blow-out, with traders tracking a healthy Wall Street performance fuelled by comments from a top Federal Reserve official that the spread of the Delta variant could cause him to reconsider plans to taper monetary policy.

Fears about the Covid mutation have rattled world markets as it forces some governments to reimpose containment measures, while sentiment was jolted further last week by minutes from the Fed's July meeting indicating it could start withdrawing its vast financial support by year's end.

The colossal bond-buying program and record-low interest rates have been a key pillar of the global recovery for more than a year, and the prospect of the cash being withdrawn has stalled that advance.

However, Dallas Federal Reserve boss Bob Kaplan, who is considered a policy hawk, suggested he could rethink his view to taper soon in light of the Delta variant's spread, which is showing signs of hobbling economic growth.

"The thing that I am going to be watching very carefully over the next month, before the next (Fed) meeting, is (whether) it is having a more material impact on slowing demand and slowing GDP growth," he said.

"I'm going to keep an open mind on that, and if it is having a more negative effect that might cause me to adjust my views somewhat from ones that I've stated."

Observers said the general consensus is that even when the Fed finishes winding back support, it is unlikely to immediately start hiking interest rates.

"Markets react to interest-rate hikes much more than tapering and we expect a pause between tapering and the first hike, suggesting liftoff in 2023 and not before," said Esty Dwek of Natixis Investment Managers.

BITCOIN BACK ABOVE $50K

Focus is now on Fed chief Jerome Powell's speech to the Jackson Hole annual conference of central bankers and finance chiefs, with hopes for a clue about a taper timetable.

All three main indexes on Wall Street rallied Friday, and Asia picked up the baton at the start of the week.

Tokyo jumped 1.8 percent while Shanghai, Bangkok and Jakarta were all up more than one percent. Hong Kong, which sank nearly six percent last week, was also up with Sydney, Seoul, Wellington and Mumbai. Taipei jumped more than two percent.

London, Paris and Frankfurt opened sharply higher.

The positive start was mirrored in oil markets, with both main contracts enjoying big gains, having suffered heavy losses recently owing to concerns that the Delta spread would impact demand as countries restrict people's movements.

Crude also rallied, helped by a dip in the dollar caused by the Kaplan remarks, while the observers said concerns over demand could prompt OPEC and other major producers to reconsider plans to increase output each month.

Still, while the week has got off to a healthy start, investors remain cautious about Delta's effect on the recovery outlook, while China's ongoing regulatory clampdown is also keeping optimism in check. 

Bitcoin broke back above $50,000 for the first time since mid-May, boosted by bargain-buying and leading some to predict the cryptocurrency could now be on course to hit $100,000.

"We're seeing some very bullish signs here," Vijay Ayyar, head of Asia-Pacific with crypto exchange Luno in Singapore, said. The currency could "test all-time highs again", he added. Bitcoin hit a record of almost $65,000 in April before suffering a sharp sell-off over the following months.

Agence France-Presse 

Bitcoin hit with record weekly outflow as rally ebbs: CoinShares data

NEW YORK, United States - Bitcoin posted a record weekly outflow, with overall sentiment on cryptocurrencies turning cautious as the digital asset's searing rally hit a wall, data from digital currency manager CoinShares showed on Monday.

Outflows for bitcoin hit $21 million for the week of April 23, the largest weekly outflow on record. Total weekly inflows for the sector were just $1.3 million, the lowest weekly figure since October 2020.

That said, CoinShares said outflows last week were 0.05 percent of the crypto sector's assets under management, while weekly inflows this year averaged 0.6 percent.

Total assets under management were $54.3 billion as of last week, down from $64.2 billion in mid-April.

"We saw investors shifting funds away from bitcoin amid some idiosyncratic developments last week, prominently including the temporary power outage in mining mecca Xinjiang," said Matt Weller, Global Head of Market Research at Forex.com and City Index.

Amid serious coal mine accidents in China's Xinjiang, Shanxi and Guizhou provinces, the Chinese government directed local coal-based power stations to conduct inspections of security measures. Data centers in Xinjiang, including bitcoin mining farms, had to shut down due to subsequent power cuts, according to media reports.

After hitting a record high just under $65,000 in mid-April, bitcoin has plunged nearly 25 percent. On Monday though, the world's largest cryptocurrency in terms of market capitalization rallied as much as 10 percent and last traded at $54,031, highlighting the asset's extreme volatility.

The second largest cryptocurrency ethereum, meanwhile, showed strong inflows of $34 million. So far this year, inflows were $792 million, or 8 percent of total AUM, reflecting renewed positive sentiment among investors.

"Cryptoasset investors continued to accumulate ethereum as the highly-anticipated July launch of EIP-1559, which will cut the new supply of ETH dramatically, approaches," said Forex.com's Weller, referring to the blockchain's planned upgrade.

Grayscale remains the largest digital currency manager, with $41 billion in assets as of April 23, down from $49.5 billion the previous week. CoinShares, the second biggest and the largest European digital asset manager, oversees about $5.2 billion, slightly down from $5.7 billion in assets as of the mid-April. 

-reuters

Bitcoin slumps 14 percent as pullback from record gathers pace

Bitcoin, the world's biggest cryptocurrency, fell as much as 14 percent to $51,541 on Sunday, reversing most of the big gains it made over the past week.

Bitcoin was last trading down 10 percent at $53,991 as of 1320 GMT, a whopping $12,000 below record highs set on Wednesday. Smaller rival Ether, the coin linked to the ethereum blockchain network, dropped 10% to $2,101.

Data website CoinMarketCap cited blackout in China’s Xinjiang region, which reportedly powers a lot of bitcoin mining, for the selloff.

Luke Sully, CEO at digital asset treasury specialist Ledgermatic, said in an email that people "may have sold on the news of the power outage in China and not the impact it actually had on the network".

"The power outage does expose a fundamental weakness; that although the Bitcoin network is decentralized the mining of it is not," Sully added.

Some widely-followed blockchain analysts on Twitter pointed to a sharp drop in "hash rate" due to the outage.

Hash rate refers to the volatility index that measures the processing capacity of the entire Bitcoin network, and it determines the power required by miners to produce new Bitcoins.

"Typically shocks to hash rate do not cause price drops. A hash rate reduction slows transactions, which ironically makes it harder to move coins to exchanges for sale. The recent price drop is well within the bounds of typical volatility, it is noise not signal," said Edan Yago, co-founder at Bitcoin-based decentralized finance protocol Sovryn.

The retreat in Bitcoin also comes after Turkey's central bank banned the use of cryptocurrencies for purchases on Friday.

Edward Moya, senior market analyst at OANDA, said cryptocurrencies had been ripe for a pullback.

"The market has become overly aggressive and bullish on everything," said Edward Moya. "It could have been any bearish headline that could have triggered this reaction."

Many cryptocurrency markets operate 24/7, setting the stage for price swings at unpredictable hours. Historically, retail and day traders have driven the moves.

Despite the sudden selloff, bitcoin is still up 89% so far in 2021, driven by its mainstream acceptance as an investment and a means of payment, accompanied by the rush of retail cash into stocks, exchange-traded funds and other risky assets.

-reuters

Australia to sell $13M bitcoins confiscated as proceeds of crime

CANBERRA, Australia — An official says about $13 million in bitcoins will be auctioned in Sydney in June after Australian police confiscated the digital currency as proceeds of crime.

Ernst & Young transaction partner Adam Nikitins said Tuesday that the accountancy firm is running the process, which is only the second such bitcoin auction in the world after the U.S. Marshals Service sold 144,000 bitcoins over two years ending in 2015 that had been confiscated from Ross Ulbricht, who founded the online drug bazaar Silk Road.

Bidders can register from Wednesday until June 7 for the 24,518 bitcoins on offer. The 48-hour sealed auction will take place from June 20.

Based on Tuesday’s bitcoin price of $533.80, the cryptocurrency is valued at almost $13.1 million.

source: business.inquirer.net

Bitcoin’s ‘blockchain’ tech may transform banking

New York, United States—The technology that drives the shadowy cryptocurrency bitcoin is drawing interest from the established banking industry, which sees a potential to revolutionize the sector.

Although bitcoin and related virtual currencies are limited to a small set of transactions and are often associated with the underground economy, the so-called blockchain technology is gaining currency in the financial world.

A blockchain is essentially a shared, encrypted “ledger” that cannot be manipulated, offering promise for secure transactions that allow anyone to get an accurate accounting of money, property or other assets.

“The blockchain, which is the technology behind the encryption and e-certification, that is a technology which might very well be very useful,” said Jamie Dimon, chairman and chief executive of JPMorgan Chase at a conference earlier this year.

Leah Gerstner, a vice president for public affairs at American Express, said the financial group made its first investment in a digital currency company called Abra “as a way to get a better understanding of blockchain technology and explore its potential.”

Gerstner told AFP that “we believe blockchain technology is playing an important role.”

The use of blockchain began in 2009 with the introduction of bitcoin and other virtual currencies that are generated by complex chains of interactions among a huge network of computers around the planet, and are not backed by any government or central bank, unlike traditional currencies.

The blockchain offers potential to the traditional finance sector due to its ease of transaction with verification from any point on the platform.

“You can imagine a number of potential use cases for this technology in financial services across both business-to-consumer and business-to-business transactions—from international money transfers to stored value,” Gerstner said.

The Linux Foundation recently announced a new collaborative “Open Ledger” project to advance blockchain technology, teaming with tech firms such as IBM and Intel, stock exchanges and major banks including Wells Fargo and Mitsubishi UFJ.

“Distributed ledgers are poised to transform a wide range of industries” including banking and shipping, among others, said Jim Zemlin, executive director at The Linux Foundation.

Transparency, lower costs
Blockchain technology could lower the cost for many kinds of consumer cash transfers that now are handled by companies like Western Union and MoneyGram.

The banking industry could save $15 billion to $20 billion in transaction costs for international payments by using the technology, according to Banco Santander, which is working on its own virtual currency.

A consortium of global banks including Morgan Stanley, HSBC, UBS, Credit Suisse, Barclays, Societe Generale and Commerzbank are working with the finance tech startup R3 to use blockchain technology for a wide range of applications.

Others moving forward include Bank of America, Citigroup and Goldman Sachs, which is working on its own virtual currency that could cut out intermediaries for settlements between financial institutions.

The technology could help facilitate instantaneous, secure financial transfers which now sometimes can take days when moving internationally, according to blockchain backers.

“This would change the way settlements of securities are traditionally carried out,” said Prableen Bajpai, founding director of the India-based research firm FinFix.

The use of a cryptographic currency such as the one being developed by Goldman Sachs “facilitates rapid, secure and confirmed transactions via network, thereby eliminating the need for a third party,” Bajpai said.

“The results are extremely timely and efficient settlements.”

Another advantage is that transactions could be made without revealing identities and other information—which could be important for institutions trying to keep personal data secure from hackers.

But a number of issues need to be resolved before virtual currencies and blockchain technology become mainstream.

The anonymity of the transactions is something that concerns regulators seeking to crack down on money laundering, and financing of criminal or terrorist activity.

New York state, for example, is pressing to require the identification of those engaging in financial transactions.

Nonetheless, many see blockchain technology as the wave of the future.

“Ultimately, blockchain could become a way for those around the world who don’t have a bank account to make purchases on the Internet. And that could affect the banks, as well as credit card companies like American Express, MasterCard, and Visa,” says Ed Yardeni at Yardeni Research.

“Blockchain still needs to show that it can grow to the size of Visa’s or MasterCard’s networks. But there are certainly many smart folks throwing a lot of money at the technology, which may one day prove disruptive.”

source: business.inquirer.net

Factbox: What is Bitcoin?

TOKYO — Frenchman Mark Karpeles, 30, the CEO of collapsed Bitcoin exchange MtGox, has been arrested in Tokyo on theft allegations as Japanese investigators grill him over the disappearance of hundreds of millions of dollars worth of the virtual currency.

Here are some key facts about Bitcoin.

Q. What is it?

A. Bitcoin is a virtual currency that is created from computer code. Unlike a real-world currency like the US dollar or the euro, it has no central bank and is not backed by any government.

Instead, its community of users control and regulate it. Advocates say this makes it an efficient alternative to traditional currencies, because it is not subject to the whims of a state that may wish to devalue its money to inflate away debt, for example.

Just like other currencies, Bitcoins can be exchanged for goods and services — or for other currencies — provided the other party is willing to accept them.

Q. Where does it come from?

A. Bitcoin is based on a piece of software written by an unknown person or people in 2009 under the Japanese-sounding name Satoshi Nakamoto. Other digital currencies followed but Bitcoin was by far the most popular.

Transactions happen when heavily encrypted codes are passed across a computer network. The network as a whole monitors and verifies the transaction, in a process that is intended to ensure no single Bitcoin can be spent in more than one place simultaneously.

Users can “mine” Bitcoins — bring new ones into being — when their computers run these complicated and increasingly difficult processes.

However, the model is limited and only 21 million units will ever be created.

Q. What’s it worth?

A. Like any other currency, its value fluctuates. But unlike most real-world analogues, Bitcoin’s value has swung wildly in a short period.

When the unit first came into existence it was worth a few US cents. Its price topped out at well over $1,000 in 2013. Now, a single Bitcoin is worth about $235.

There are presently more than 14.5 million units in circulation. Some economists point to the fact that — because it is limited — its price will increase over the long run, making it less useful as a currency and more a vehicle to store value, like gold. But others point to Bitcoin’s volatility, security issues and other weaknesses.

Q. What’s the future?

A. Some commentators say that like many technological developments, the first iteration of a product will encounter difficulties, possibly terminal ones. But the trail it blazes might smooth the way for the next crypto currency.

Problems include an apparent vulnerability to theft when Bitcoins are stored in digital wallets. This may be what has happened at MtGox.

The virtual currency movement also faces legitimacy issues because of the way it allows for anonymous transactions — the very thing that libertarian adopters like about it.

Detractors say Bitcoin’s use on the underground Silk Road website, where users could buy drugs and guns with it, is proof that it is a bad thing.

Some governments, including Russia and China, have heavily restricted how Bitcoins can be used.

If Bitcoin does become more widely accepted, experts say, it could lead to more government regulations, which would negate the very attraction of the Bitcoin concept.

source: business.inquirer.net