Crypto Pirates

Markets and exchanges for cryptocurrencies have become extremely vulnerable to criminal activity. Indeed, exchanges are used to facilitate money laundering. This is why the South African exchange, Luno, restricts withdrawals to cope with the same. The restriction will be applied differently for each client and will vary by client. They hope that by doing so, they will significantly diminish illicit activity in the sector.

What was the purpose of the South African trade?

Luno's initial move was to suspend transfers to Binance from their platform. We are all aware of Binance's versatility, which makes it extremely easy to utilise it illegally. Luno has also implemented "dynamic risk-based constraints," which put distinct limits on various consumers. The unfortunate thing is that they failed to warn their users, and when a user attempted to move their cryptocurrency to Binance, they discovered the transaction failed.

When asked why they instituted this additional restriction, they stated that it was to safeguard their users. Simultaneously, Luno stated that it will assist them in substantially improving their compliance with anti-fraud and financial crime regulations. Luno also declined to disclose how the risk scores used to determine the withdrawal limit are calculated.

Users should follow Luno's advice

Clients will have no control over their risk scores, the exchange made abundantly clear. It will have a large number of inputs from a range of different points that will contribute to the final score. However, users are advised to maintain their account details up to date to avoid being penalised. Simultaneously, they are advised to utilise security settings to prevent their account from being compromised.

Additionally, Luno stated that the actions they are taking are not in response to a financial surveillance department request. Indeed, they are doing so independently to ensure that financial crimes are avoided and that the exchange is extremely secure to use.

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A few hours after Bukele recognised Bitcoin as legal cash in El Salvador, a Panamanian deputy spoke about the country's next government projects. Additionally, the Central American government plans to adopt cryptocurrency before the end of the year.

The global adoption of Bitcoin may be huge

Panama introduces a cryptocurrency bill to capitalise on emerging Blockchain technology. This Bitcoin adoption intends to make Panama more attractive as a source of employment and to make national activities more transparent.

The decree will ensure legal, fiscal, and regulatory security for all Panamanian citizens, allowing them to easily use, save, and exchange cryptocurrencies. This legal initiative discusses Bitcoin as a legal cryptocurrency, as well as other prominent coins such as Ethereum, ADA, and Solana.

While Panama has begun work on its cryptocurrency initiative, Ukraine has begun work on a legislative framework that will assist cryptocurrency. However, unlike the Panama treaty, this order has the exclusive purpose of regulating cryptos. Ukraine intends to centralise control of decentralised currencies and to link them to the native currency, the hryvnia.

Ukraine will normalise cryptocurrency trading through the issuance of a new currency, likely a stablecoin. These adoption efforts have been replicated in China, where the YenCoin was launched.

What about the future of cryptocurrencies?

Cryptocurrencies gained popularity last year, reaching a peak of $64000 in May. With such a high price, it was surprising to see that Bitcoin had lost 50% of its worth. Bitcoin is one of the most commercialised currencies today, and as a result, organisations such as Visa have pondered developing decentralised payment systems.

Latin American countries like as El Salvador, Panama, Cuba, Venezuela, Brazil, Colombia, and Argentina have been receptive to Bitcoin adoption, which has increased the currency's value. Taking this wave of adoption into account, the future of Bitcoin and cryptocurrencies may be prosperous in terms of supplanting the current financial market.

For the time being, this new Bitcoin acceptance increases the cryptocurrency's market capitalisation to $859,171,183,394 and its circulating supply to more than 18 million BTC, according to CoinMarketCap. The cryptocurrency is trading at a steady $45,669, with a 0.95 percent recovery in the last 24 hours. Before the end of the year, Bitcoin may achieve a new all-time high.

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The year's most anticipated event is set to occur, as the Cardano Alonzo hard fork is nearing activation. The addition of smart contracts to the Cardano network is the first step towards a market revolution. If it performs as expected, it will send shockwaves through the cryptocurrency market due to its capabilities.

However, the concern here is how severely it could harm Ethereum's competitors and how investors would react.

Cardano, Ethereum, and the Future of Smart Contracts Cardano

With the Alonzo Hard fork scheduled for September 7, investors and developers alike are understandably thrilled. However, throughout the smart contract testnet's operation, customers saw several significant concurrency issues, which sowed doubt in their hearts.

Nonetheless, when comparing Cardano with Ethereum, it becomes evident why the former has a high chance of surpassing the latter.

Additionally, ADA's network is capable of processing more transactions per second (250 TPS at the moment) than Ethereum's (15 TPS). Additionally, it offers lower gas prices. This will aid Cardano's growth at a time when Ethereum's costs average around $4.2 per transaction.

Additionally, smart contracts are emerging at an ideal time, as NFTs have already dominated the industry. Daily volumes have been around $64 million. This could result in the migration of Ethereum-based NFTs to Cardano's faster and more affordable network.

What are the investors' perspectives?

Investors were scared by the September 7 drop, as Liquidations reached a four-month high and Open Interest plunged to a monthly low. However, they appear to have reverted to optimistic sentiment in expectation of Alonzo. Purchasing orders exceeded forecasts by 12 million ADA ($29 million), while sale orders exceeded predictions by 12 million ADA ($29 million). This is despite the fact that prices fell to levels comparable to those seen in May.

If prices do increase as a result of Alonzo's publication, the already profitable 82 percent addresses could see an increase in figures and profits. To accomplish this, Cardano needs maintain its current high correlation with Bitcoin (0.83). Simultaneously, ADA's volatility should be kept as low as feasible, below the current level of 109 percent.

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The United States Securities and Exchange Commission (SEC) has issued a warning concerning fraudulent cryptocurrency investment schemes. The regulator adds that some investors may be experiencing fear of missing out (FOMO) as a result of the recent price increase of some crypto assets.

The SEC Warns Investors Against Cryptocurrency Scams

The Securities and Exchange Commission's Office of Investor Education and Advocacy (OIEA) and the Division of Enforcement's Retail Strategy Task Force (RSTF) published an Investor Alert last week on cryptocurrency investment schemes.

The notification states that "Fraudsters continue to take advantage of the growing popularity of digital assets to attract retail investors into schemes, frequently resulting in catastrophic losses."

Given the growth in price of certain digital assets in recent years, some investors may have FOMO [fear of missing out], fearful that they may lose an opportunity to become extremely wealthy.

The alert details several red flags of a scam. Guaranteed high investment returns... with little or no risk” is a well-known red flag of deception. The SEC said that fraudsters may even present fabricated history returns on their websites to demonstrate great investment returns.

Another red flag is the seller's lack of a licence or registration. According to the SEC, “unlicensed, unregistered sellers commit the majority of securities fraud directed at retail investors in the United States.”

Additionally, scammers frequently invent investment returns in order to seduce investors. Additionally, the SEC cautioned that "if an investment 'opportunity' seems too good to be true, it almost always is."

Finally, the notification warns against the use of "false testimonials." The SEC highlighted that investors should never make investing decisions exclusively on the basis of testimonials, stating:

Fraudsters occasionally pay individuals – such as actors posing as ordinary people who become billionaires, social media influencers, and celebrities – to promote an investment on social media or in a video.

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Bloomberg has issued its September Crypto-Outlook report, which focuses on Ethereum, the world's second-largest cryptocurrency. As with the August report, certain points remained. Among them is the fact that Ethereum is poised to dethrone Bitcoin in the long run.

According to Bloomberg, Ethereum is on track to surpass $5,000 in the near future

While proponents of Ether are predicting a price breakthrough to $4,000, Bloomberg sees $5,000 as a fairly feasible price goal. The declining supply of Ethereum is fueling the bullish trend, as is the fact that Ethereum is a key denominator for NFTs, the popularity of which is directly impacting Ether's pricing by tilting the demand vs supply balance to the optimistic side.

“Ethereum appears to be in a strong position to continue its price appreciation. In Sept. 2, the second-largest cryptocurrency is trading at approximately a 10% discount to its top, and non-fungible tokens (NFTs) are rising demand for what is rapidly becoming the internet's money, while incremental supply is decreasing owing to a recent upgrade.”

Ethereum will soon dethrone Bitcoin and seize the lead

Additionally, Bloomberg notes that the thoughts expressed by analysts who believe Ether has the capacity to dethrone Bitcoin are backed up by data. Even after highlighting this possibility in a previous analysis, Bloomberg strategists make a point of reiterating it.

“Ethereum outperforming Bitcoin has been a hallmark of crypto bull markets, and we believe the odds are stacked in Ethereum's favour since the 2019 bottom. By simply following, the No. 2 crypto can be added to the list of proxies for the No. 1 to attain the $100,000 threshold.”

Even more optimistic is the fact that Ethereum is one of the most popular cryptocurrency assets. This has been the case for several years, and Bloomberg believes it could last much longer, similar to how Amazon dominated the e-commerce business.

“The trend in crypto-assets is increasing dollar domination, followed by Bitcoin, Ethereum, DeFi, and approximately 11,000 want tobes. This has been the trend over the last few years and makes sense in light of patterns in revolutionary industries, such as e-commerce, which is controlled by Amazon.com”.

Bear in mind that optimistic Ether rumours are not indicative of strategists being negative on Bitcoin. Indeed, Bloomberg experts say that despite Bitcoin's struggles to maintain momentum above $50,000, bulls remain in charge and the commodity may easily reach $100,000 this year.

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Cryptocurrency is rapidly integrating into national economies and the global economic process, with some countries currently accepting it as legal cash. By this logic, the future of the global economy will undoubtedly include cryptos in a significant capacity. There are even speculations that crypt currency would eventually supplant fiat cash. The Bank of International Settlements (BIS) maintains that national central banks must be prepared to maintain financial sector stability in the face of the advent of digital currencies.

To do this, these central banks must prepare for the introduction of central bank digital currencies (CBDCs), just as they do with fiat currency in their home nations. According to the (BIS), central banks would have to adapt to the current evolution of the global financial landscape, which is dominated by digitisation. To accomplish this, their money would also have to adopt the digital format, as full integration would be impossible without it. Central banks are being urged to expedite the design of the CBDC, which is already behind schedule by default. This is because developing the project would take years, whereas stablecoins and crypto tokens are already available.

According to the BIS, a cryptocurrency that is considered a cutting-edge financial innovation will require a well-designed framework to be completely integrated into global financial and monetary institutions. This is where CBDCs come into play, since they would provide legal support and framework for the integration of crypto assets into countries' financial systems. To construct these CBDCs, much research and analysis would be required to ensure their financial stability once developed.

Stablecoins And Decentralised Financial Institutions

Given that crypto is the world's future, the importance of stablecoins and DeFis cannot be overstated, as they are critical components of a digitised financial system's survival. This is why several global regulators have set stringent rules and restrictions on DeFi exchanges. Because the likelihood of widespread adoption of these systems is looming, security and safety must be ensured prior to that happening in order to secure the financial system's longevity. As stablecoins and DeFis are expected to become new financial models, it is critical to ensure that their frameworks are effective and secure.

The Global Market Impact of CBDCs

Certain flaws in both stablecoins and decentralised finance systems can eventually result in their collapse upon widespread adoption. This is why CBDCs are being recommended as a way to address these issues, as they will be awarded only once specified objectives are completed. Consumer protection would likewise be a focus for these digital currencies, as would user satisfaction.

They must be constructed in such a way that they are simple to use, while also providing flexibility, robustness, and safety. The development of CBDCs is a collaborative effort including the world's central banks.

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Since Bitcoin's surge last year, high-level financial organisations have placed a far greater premium on its value. While corporations such as Microstrategy and Tesla have invested heavily in the leading digital asset, Ethereum is still far behind in terms of adoption.

However, Coinbase, a NASDAQ-listed cryptocurrency exchange, recently announced plans to invest millions in the purchase of Ether, among other altcoins.

Even still, even businesses with no crypto-allegiances are not rushing to add ETH to their balance sheets. This circumstance, however, may soon alter, according to Ryan Selkis.

During a recent podcast, the CEO of Messari predicted that Ethereum will soon gain institutional acceptance. Why? Because new crypto-assets have a half-life. He stated,

“The first asset that almost all new customers will likely accumulate for their treasury or as part of an investing strategy will almost certainly be Bitcoin, followed by Ether.”

It also boils down to their value propositions, which include digital gold vs. token interest in the "financial Internet," according to the exec. In that regard, he noted, "Ethereum has actual transaction volumes and real apps that are running on top of it."

Given that both networks are leaders in their respective industries, there may come a point in the future when their market capitalisation are identical. Selkis stated that such a scenario would be interesting.

“You're going to have Bitcoin and Ethereum maximalists at each other's throats, arguing in perpetuity about a fictitious contract and a fictitious dispute over two completely distinct things that happen to be the same size.”

However, he remarked that it would make Ethereum a "far better trade."

According to many proponents, Ethereum flipping Bitcoin, or "flippening," is a matter of time. Selkis, on the other hand, believes that market capitalisation and price comparisons should be avoided because they are "most irrelevant criteria."

“Even on Coinbase, we observed greater trading volume on Ethereum last quarter than on Bitcoin, and one could easily argue that Ethereum is already more popular than Bitcoin based on transaction volume or any other number of metrics.”

Ethereum is the world's most widely used blockchain, owing to the millions of apps and platforms created on top of it. Due to the fact that the network's native token is used for payment, the volume of ETH transactions has inevitably been higher than that of BTC. The majority of users actually favour the latter as a means of storing value.

Nonetheless, the analyst was not entirely effusive in his praise for Ethereum. While ETH 2.0 appears to be nearing completion, Selkis feels the project's shift to Proof-of-Stake may still face "execution risk." Additionally, he stated,

“I don't believe Ethereum is the clear winner when it comes to resolving decentralised finance transactions or any form of value transfer, whether it's NFTs or currencies.”

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According to CryptoQuant data, the amount of Bitcoin available on exchanges has reached a record low. According to prominent researcher Ki-Young Ju's website, BTC availability on exchanges has returned to its lowest level since May of this year.

At the time of press, BTC was trading at 2.399 million on exchanges. May's total was slightly lower, at 2.390 million. The data indicates that May's figure was the lowest ever recorded prior to the BTC's inception. Traders reversed the deposit trend in May to allow the BTC price to climb. A similar occurrence occurred in September.

A Common Narrative of the Sell Liquidity Crisis

A similar catastrophe like the one that occurred in May is currently occurring in September. According to Ju, the trend was a classic story that always ended up boosting healthy liquidity purchases. When the BTC price fell, many investors bought in anticipation of a price increase, but the buying rate slowed due to sellers hoarding BTC.

According to the crypto analyst, it is not retail that should bear the brunt of the supply shortage. Since Monday, substantial withdrawals have occurred on derivatives platforms, reducing BTC supply. According to Glassnode statistics, the supply segment has shifted for the first time in two years.

Bitcoin Is Expected to Remain Above the $43K Level

BTC was trading at $46k on Friday, indicating that the popular cryptocurrency is still on the mend following Tuesday's meltdown. According to experts, the support level will be between $43k and $445k, and it is expected to climb to $50k. On the plus side, $46k will act as a strong resistance level for the BTC if it rises all the way to $55k and then falls again. This will provide the necessary strength for other cryptocurrencies to scale.

Will Tuesday's Market Crash Recur When Bitcoin Reaches $50,000?

Tuesday's market meltdown remains September's most volatile marketing day. BTC was edging closer to a record high following El Salvador's announcement that BTC would become legal tender. BTC had surged above $53k in the first three hours, but then fell nearly 20% to below $43k. Analysts blamed the announcement for the crash's primary cause.

Another crash of that magnitude is unlikely to occur if Bitcoin maintains the resistance level and breaks through $43k. With supply on exchanges reaching all-time lows, the price of BTC will continue to fluctuate.

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The People's Bank of China issued a report announcing that steps to combat digital asset fraud have been accomplished. Will NFTs and GameFi thrive in the regulatory aftermath?

This weekly compilation of news from Mainland China, Taiwan, and Hong Kong seeks to compile the industry's most relevant news, including key projects, regulatory changes, and business blockchain integrations.

The regulators have triumphed

Following a stormy summer of crackdowns, Chinese regulators have declared triumph in eliminating illegal cryptocurrency trading activity in the country. This discovery was made in the forecast part of the People's Bank of China's "China Financial Stability Report 2021," which was released on September 3.

The section titled Major Achievements in the Battle to Prevent and Defuse Major Financial Risks emphasises that regulatory work in internet asset management, equity-based crowdfunding, internet insurance, virtual currency trading, online foreign exchange trading, and other areas has been largely completed.

While this may appear to be a huge negative for the business, most projects and companies in China are now breathing a sigh of relief. The end of the crackdown means that businesses will have a little more breathing room to operate without fear of legal repercussions.

China's public blockchain business, or what's left of it, will no longer have to operate in the shadows. There is also anticipation that future editions of Shanghai Man's columns would focus more on development and innovation and less on crackdowns.

The mining industry bore the brunt of the regulators' wrath, while exchanges and brokers are clearly turning away from China in the long run. Players such as ByBit and Amber have already stated that they do not allow Chinese users, which might be a trend in the future if the hazards of doing business in China do not outweigh the profits. Bigger firms like Binance and FTX will have far bigger decisions to make, but for the time being, they are not shying away from onboarding and servicing Chinese users.

From Sichuan to San Antonio

After winding down operations in China, many significant mining companies began looking for greener pastures elsewhere. Since Texas governor Greg Abbot announced that Texas would become a crypto leader, numerous bitcoin mining businesses have relocated to the Lone Star state in pursuit of regulatory stability.

Bitmain, the world's largest mining manufacturer, has a location in Rockdale, Texas. Rockdale has a population of less than 6,000 people, a far cry from the 21 million people that call Beijing home. Bitmain is also deploying $62 million in hardware to the state of Georgia.

BIT Mining, based in Shenzhen, is also investing $26 million to develop a data centre in Texas. It joins BlockCap, Riot Blockchain, and other mining companies already present in the area. All of these enterprises will be encouraged by the news that state legislators in Texas have signed Texas House Bills 4474 and 1576, which legalise cryptocurrency under commercial laws.

Texas is now the fourth US state to recognise the legal status of digital assets, providing investors and businesses with clarity that is severely lacking in China. Various governmental organisations in China have flipped-flopped on the legal status of cryptocurrencies just this summer. This is generating a decline in confidence in the Chinese market's long-term viability, which will drive even more enterprises offshore.

One country, two regulators

According to a Hong Kong Securities and Futures Commission executive, the increasing spate of fraud cases indicates to the need for tougher regulation. The special administrative region has a far laxer regulation towards digital assets, allowing exchanges such as FTX, Bitfinex, and other Fintech firms to start up operations.

Hong Kong has long been regarded as a link between multinationals and the thriving Chinese market, but in recent years, this dynamic has begun to shift. With tougher regulations and greater uncertainty in Hong Kong, Singapore is seeing much more growth in the bitcoin field, with a number of high-profile industry executives relocating there.

Trends that are not fungible

The overall trend of NFTs has not gone unnoticed by the Chinese market. OKExChain launched its OKExNFT marketplace on September 2, joining the likes of Binance and FTX in launching similar platforms.

While it may not have the most imaginative name staff, it does host a number of Loot-lookalike NFTs known as Root, which are aiming at capturing the NFT and GameFi market. China's gaming and trading markets have historically been quite active, making this a logical move. It remains to be seen whether OKExChain can replicate the success of other exchange sidechains.

Steph Curry's choice to join FTX as an ambassador drew varied reactions, with some pointing out that the NBA star, known in China for his lighthearted nature, has evolved into a business master.

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Since 2009, when Bitcoin initially emerged from the innards of an unknown engineer's computer system, it appears as though cryptocurrency has been dismissed as a meaningless craze.

While some of the criticism has come from members of the general public who may not understand what cryptocurrencies are, how they work, or why they have any value at all, some extremely astute financial minds have also cast doubt on crypto's burgeoning importance.

One such opponent is billionaire investor John Paulson, who recently described digital currencies as a bubble that will "ultimately prove worthless."

The volatility in cryptocurrency markets during the last few days — Bitcoin fell by 17% at one point on Tuesday, the same day El Salvador began adopting it as legal tender — does little to defend Paulson's criticism.

Let's see what his beef is with crypto and whether you should sell or buy the dip.

Paulson's justifications for being pessimistic on cryptocurrency

Paulson has a track record of revealing at least one high-profile financial swindle. As a co-founder of the Carlyle Group, he was one of the hedge fund titans who identified the subprime mortgage industry's corruption and consequently shorted the US housing market before it crashed in 2007, earning himself an estimated $4 billion.

And he appears to be equally dubious of crypto.

“I would not encourage investing in cryptocurrency to anyone,” Paulson stated during a Bloomberg Wealth with David Rubenstein Bloomberg TV broadcast.

“I'd characterise them as having a finite supply of nothing. Thus, to the degree that demand exceeds supply, the price would increase. However, if demand declines, the price will fall. There is no fundamental value to any cryptocurrency other than the fact that there is a finite supply.”

It's also worth considering how much true value an item may have when its price can move so dramatically from minute to minute, as Bitcoin's price did on Tuesday. According to CoinMarketCap's calculations, the total cryptocurrency market lost approximately $300 billion in value between Tuesday morning and Wednesday afternoon.

This level of volatility is reminiscent of the early 2000s dot-com bubble and the housing catastrophe from which Paulson previously benefitted. Both were the outcome of billions of dollars of uninformed money being attracted to useless properties.

Paulson continued by stating that cryptocurrencies may eventually lose their value.

“Once the euphoria subsides or liquidity dwindles, they will fall to zero. I would not encourage investing in cryptocurrency to anyone,” he stated.

The Bitcoin's flip side

As Bitcoin prices fell on Tuesday, at least one investor took advantage of the drop: El Salvador.

Bitcoin's collapse on Tuesday came at an inconvenient time for the Central American republic, which was just announcing its intention to embrace bitcoin as legal tender. Despite the uproar, El Salvador purchased 150 additional Bitcoin on Tuesday morning, when values were falling.

Nayib Bukele, El Salvador's president, definitely sees more value in Bitcoin than Paulson does. However, his — or anyone's — decision to purchase a volatile asset as its value plummets is about as dangerous as investing gets.

Bukele tweeted Tuesday morning that he purchased his 150 new coins at 11:15 a.m. (Since Twitter posts are immediately timestamped in their local time zone, this would be 11:15 CST or 1:15 EST.) If he captured them within an hour or two of the tweet, El Salvador certainly acquired their 150 coins for around $51,000 each.

The issue is that Bitcoin devoured it following the purchase. It was selling for $46,927 at 4:15 p.m. on Tuesday. It plummeted to little over $44,000 in the early morning hours of Thursday before recovering to over $46,500 by 4:00 p.m.

That is the snag with purchasing the dip. You never fully know whether anything is a dip — or a trough, or a Marianas Trench-sized pit of horror — until enough time has passed to allow for hindsight.

Participate in the game

Whether you consider cryptocurrency as the currency of the future or a short-lived get-rich-quick gimmick, there are numerous ways to put your money to work for you.

Concentrating on assets that generate cold, hard cash is an excellent place to start for risk-averse investors.

For example, certain prominent investing services enable investors to secure a continuous rental income stream through investments in premium real estate holdings ranging from commercial complexes in Los Angeles to residential buildings in New York City.

You'll have exposure to high-end properties that are often only available to big-name real estate moguls, and you'll earn consistent dividend distributions on a quarterly basis.

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