Crypto market analysis: Facebook to launch US stable coin
The price of bitcoin has tumbled over 25% in the last seven days, hitting a low of $42,025 over the weekend, as investors took profits en masse.
Bitcoin, as well as peers such as ethereum which have also slumped by similar amounts in the last week, has sold off after a staggering run year-to-date which had seen it double since the start of 2021.
Amid a wave of profit-taking last week, much of the reason for the sell-off is being placed on Elon Musk, the Tesla CEO, after a series of tweets about bitcoin, its energy usage, and the company’s position in the cryptoasset.
‘We are concerned about rapidly increasing use of fossil fuels for Bitcoin mining and transactions, especially coal, which has the worst emissions of any fuel,” Musk tweeted.
‘Cryptocurrency is a good idea on many levels and we believe it has a promising future but this cannot come at great cost to the environment.
‘Tesla will not be selling any Bitcoin and we intend to use it for transactions as soon as mining transitions to more sustainable energy. We are also looking at other cryptocurrencies that use <1% of Bitcoin’s energy/transaction.’
Nonetheless, Musk himself seemed to counter many rumours this morning after clarifying that Tesla had not sold any of its bitcoin recently.
Having bottomed at $42,000, bitcoin bounced back to trade at $44,300 this morning, with ethereum at $3,376 having dropped to $3,095 at its low point.
Facebook to launch US stable coin
The group behind Facebook’s Libra project plans to launch a US dollar stablecoin after scaling back its global ambitions amid resistance to its plans in Switzerland.
The Diem Association, which was formerly known as Facebook’s Libra project and is made up of 26 financial firms and non-profits, said it was relocating its main operations from Switzerland to the United States in a statement.
It has said it will now run a blockchain-based payment system that allows real-time transfer of Diem stablecoins, with plans to register as a money services business with the US Department of the Treasury’s Financial Crimes Enforcement Network.
Stablecoins, digital currencies pegged to a fiat currency, are being used increasingly via numerous networks. California-based Silvergate Bank will issue the Diem USD stablecoin and manage the Diem USD reserve, with a pilot expected before a full rollout.
“We are committed to a payment system that is safe for consumers and businesses, makes payments faster and cheaper,” the association said.
EOS doubles after raising $10bn to launch exchange
EOS coin saw its price double in a day last week after the company behind the coin said it had raised $10bn to build a next-generation cryptocurrency exchange.
Block.one, the company behind the EOSIO software, said it was launching a subsidiary to create the crypto exchange, with billionaire backers including Peter Thiel among the investors in the project.
The platform, called Bullish Global, will be a blockchain-based exchange and is set to be released this year.
“Bullish’s balance sheet is strong, and its vertical integration offers stability and liquidity to the cryptocurrency space. I’m happy to join Bullish as an investor and advisor as it gets started on a long and fruitful journey,” Thiel was quoted as saying.
EOS’ price soared in response, jumping to a peak above $14 last week, before retreating back to trade around the $10.50 mark. It started May priced at just $6.
eBay to allow NFTs on the platform
eBay has said it will allow the sales of NFTs on its platform in the future amid a recent frenzy for the tokenised collectibles.
The e-commerce company is expected to slowly build up sales of digital collectibles on the platform, starting with a smaller group of verified sellers.
“In the coming months, eBay will add new capabilities that bring blockchain-driven collectibles to our platform,” eBay exec Jordan Sweetnam told Reuters.
eBay has already invested heavily in infrastructure for physical collectibles like trading cards, as well as items like sneakers and watches which they help verify for buyers.
The NFT market shows little sign of slowing, with British auction house Christie’s selling nine CryptoPunk NFTs for nearly $17 million last week, according to a tweet posted on May 12.
Ethereum founder Vitalik donates $1.2bn to India relief fund
Ethereum creator Vitalik Buterin has pledged $1.2 billion to India’s Covid-19 relief fund.
The 27-year-old programmer, who created ethereum in 2013, transferred new Dogecoin copycat Shiba Inu tokens which had been gifted into his Etherscan public wallet – which had a combined worth of more than $1bn dollars – to the India Covid Relief Fund.
Buterin handed the assets over to a relief project established by Polygon chief Sandeep Nailwal who created the fund last month in response to the coronavirus crisis in India.
Buterin had already personally gifted $600,000 to help kick off the fund previously.
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A Stablecoins List for the Crypto-Curious Who Are Volatility-Averse
Crypto A Stablecoins List for the Crypto-Curious Who Are Volatility-Averse
This stablecoins list won’t give investors access to the wild price swings that put crypto on the map. Stablecoins are conspicuously less volatile than most other cryptocurrencies. They accomplish this by pegging their value to a more stable asset.
For instance, some stablecoins are backed by a dollar reserve. These reserves are usually handled by an independent administrator. And the administrator is regularly audited to certify that the fixed ratio between the reserve and the coin (typically 1:1) is warranted. But this is just one of several examples of an asset that a stable coin can be pegged to.
There are commodity-collateralized stablecoins. These are backed by assets such as precious metals, oil or even real estate. There are also crypto-backed stable coins. And there is something called “seigniorage style” stablecoins. These are managed and backed by an algorithmic process as opposed to a hard asset. The algorithm naturally expands and contracts this sort of stablecoin’s supply. This process is modeled after the way central banks manage monetary supplies. And it naturally keeps the value very… well, stable.
This isn’t an exhaustive stablecoins list. There are several other types out there. But these are the main examples and the ones that we’ll be taking a closer look at going forward.
The Stablecoins List: The Five Favorites in Our Wallets
Tether (USDT)
Paxos Standard (PAX)
TrueUSD (TUSD)
USD Coin (USDC)
Binance USD (BUSD)
Tether
We’re starting off our stablecoins list with the largest stablecoin by market cap. Tether is a pretty standard blockchain-based cryptocurrency. When it first launched in 2014, Tether set out to back each token 1:1 with U.S. dollars. That’s no longer the case, though. These days, each Tether token is backed by Tether’s reserves. (You can check out Tether’s transparency page here.)
As a store of value, Tether is extremely reliable. But what’s most interesting is how quickly Tether’s usage has surged of late. This stablecoin recently surpassed the $1 trillion mark on a yearly basis for the first time in terms of adjusted on-chain volume. It makes up more than half of the overall transaction volume of stablecoins. And adoption is still rising. That makes this one of the most promising cryptos on our stablecoins list.
Paxos Standard
With a market cap just above $1 billion, Paxos would be considered tiny compared to Tether. But it doesn’t appear like that will be the case for long. It is an extremely well-regulated stablecoin. And it’s one of the few that have been approved by the New York State Department of Financial Services. This helped pave the way to a major partnership with PayPal (Nasdaq: PYPL). The approval played a major role in allowing it to get into the crypto business. And having a friend in the form of this payments systems giant will be very helpful in introducing increased adoption. That makes this one of the more promising tokens on our stablecoins list.
TrueUSD
This extremely reliable stablecoin is about on par with Paxos in terms of market cap. This one is 100% backed by the U.S. dollar. And it also happens to be one of the most liquid stablecoins available to date. TrueUSD is a product of the TrustToken team, which has developed an excellent reputation for developing asset-backed tokens.
It’s also worth noting that TrustToken has developed partnerships with banks to store the funds backing this stablecoin. But the most obvious reason to like TrueUSD is that is has lower transaction fees than wire transfers. And on top of that, it offers above-average interest rates on stored balances. All these factors make this a no-brainer for our best stablecoins list.
USD Coin
In terms of market cap, USD Coin is the second-largest stablecoin. It was developed by the Centre Consortium, which is a collaboration between Circle and Coinbase (Nasdaq: COIN). This Ethereum-based stablecoin is also pegged to the U.S. dollar at a 1:1 ratio. And it’s available in just about every crypto exchange out there. (If you happen to be in search of an exchange, you can check out a side-by-side comparison of two of our favorites here.)
Because it operates on the Ethereum network, USD Coin can be transferred around in the world in virtually no time. This also makes it a very cost-efficient means of transferring funds. And just for peace of mind, U.S. dollar reserves are audited monthly by the giant accounting firm Grant Thornton. All of this makes this one of the stablest coins on our stablecoins list.
Binance USD
Not to be outdone by Coinbase, Binance developed a stablecoin of its own that’s also pegged 1:1 to the U.S. dollar. And it can also be used anywhere the ERC-20 Ethereum platform is accepted. This means that Binance USD can be used for many forms of commerce, and transactions can be completed in mere minutes. This stablecoin has also been approved by the New York State of Financial Services. Like Paxos Standard, there are no fees associated with creating and redeeming Binance USD. And needless to say, this is the go-to stablecoin for those who prefer to use the Binance exchange for their crypto transactions.
Why Invest in This List of Stablecoins?
For starters, the stablecoins on this list all come with a hearty dose of transparency, as all transactions are recorded on a public ledger that can be monitored by anyone. The other reason these stablecoins make for a good investment is that transaction speeds blow traditional payment methods out of the water. Have you ever seen a change show up on your bank statement days after you made it? That doesn’t happen on blockchains. And stablecoin transactions don’t rely on third parties to verify transfers. This leads to lower fees.
For someone using crypto as a means of transferring their money (or buying other cryptos), this stablecoins list is simply ideal.
Why Stablecoins Might Not Be Right for You
One of the big reasons crypto has caught on is its decentralized nature. But the same can’t be said for the tokens on this stablecoin list. For the most part, they are created by centralized outfits that own the currency. While this keeps them much less volatile than traditional cryptocurrencies, it also means that they are less prone to grow in value. If you’re looking for the next moonshot, there are other coins, like SafeMoon or Telcoin, that might be of interest.
The Bottom Line on Stablecoins
The investment opportunities on our stablecoins list won’t be making anyone rich. But they do offer an additional way to diversify your crypto portfolio… while getting a nice dose of stability in the process. They can also offer a sort of safety net for those trading in some of the more volatile altcoins. If the value of a coin is rapidly declining one of the easiest ways to exit a position is by simply trading it for a stablecoin. It’s an easily accessed escape hatch that can be used to store value while deciding on your next trade.
If you’re not sure what your next crypto trade should be, we suggest signing up for Manward Financial Digest. Manward founder – and crypto expert – Andy Snyder offers all sorts of ways to put stablecoins to work while trading them in for some of the fastest-growing cryptocurrencies on the market. Just enter your email address in the box below and start preparing for your next crypto trade.