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New Research Reveals ‘Systemic Risk’ To Bitcoin As Its Price Crashes Under $60,000 – Forbes

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Bitcoin and cryptocurrency prices have rocketed this year, propelling the combined crypto market to over $2.6 trillion as Wall Street and mainstream investors flock to digital assets.
The bitcoin price has added almost 400% since this time last year, climbing to over $60,000. However, bitcoin has fallen sharply over the last 24 hours, dropping under the closely-watched $60,000 level.
Ahead of bitcoin’s price plummet, researchers found the cryptocurrency is still concentrated among a handful of holders, warning this makes “bitcoin susceptible to systemic risk.”
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The bitcoin price has dropped under $60,000 per bitcoin after climbing from under $40,000 through … [+] October.
“Our results suggest that despite the significant attention that bitcoin has received over the last few years, the bitcoin ecosystem is still dominated by large and concentrated players, be it large miners, bitcoin holders or exchanges,” analysts from the National Bureau of Economic Research wrote.
“This inherent concentration makes bitcoin susceptible to systemic risk and also implies that the majority of the gains from further adoption are likely to fall disproportionately to a small set of participants.”
Researchers found the biggest 10,000 bitcoin holders held around 27% of the total 18.6 million coins in circulation at the end of 2020, with a high degree of concentration among crypto exchanges and so-called miners—those that secure the bitcoin blockchain in return for freshly-minted coins. The top 10% of miners control 90% of the bitcoin mining capacity, with just 0.1%—about 50 miners in all—contributing 50% of this.
“This measurement of concentration most likely is an understatement since we cannot rule out that some of the largest addresses are controlled by the same entity,” researchers Igor Makarov and Antoinette Schoar wrote, pointing to many of the early mined bitcoins that are likely all controlled by bitcoin’s mysterious creator Satoshi Nakamoto but are spread across some 20,000 different addresses.
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The bitcoin price has rallied over the last month, recording a fresh all-time high of $67,000 per … [+] bitcoin.
The researchers warned that such high levels of concentration means the bitcoin network is susceptible to a so-called 51% attack, where miners could collude to reverse transactions. Such a scenario happened in 2014 when the mining pool Ghash.io briefly controlled 51% of all the bitcoin network’s processing power.
The massive bitcoin and crypto rally this year, sending the combined market from around $700 billion to over $2.5 trillion, has sparked concern among regulators and central bankers who fear a crash could be imminent.
Earlier this month, influential central banker Jon Cunliffe, currently serving as the Bank of England’s deputy governor for financial stability, warned “a massive collapse in crypto-asset prices [is a] plausible scenario” and called for the fast-growing bitcoin and crypto market to be urgently regulated to prevent it becoming a threat to the wider financial system.
Despite the warnings and bitcoin’s fall under $60,000, bitcoin and crypto traders remain upbeat.
“The bulls are still gunning for a three-figure end to the year, although somewhere between the range of $70,000 to $90,000 is likely more realistic, with three figures potentially transpiring towards the end of 2022’s first quarter,” Tim Frost, the chief executive of the trading app Yield, said in emailed comments.
Last week, a panel of 50 bitcoin and cryptocurrency experts predicted the bitcoin price will continue to climb through 2021, hitting highs of around $80,000, before surging to $250,000 by 2025 and a staggering $5 million per bitcoin by 2030.

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Cryptoverse: Bitcoin miners get stuck in a bear pit – Reuters

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Sept 27 (Reuters) – Spare a thought for the beleaguered bitcoin miner.
In late 2021, miners were the toast of the town with a surefire path to profit: hook powerful computers up to cheap power, crack fiendishly complex maths puzzles and then sell newly minted coins on the booming market.
A year's a long time in crypto.
Global revenue from bitcoin mining has dropped to $17.2 million a day amid a crypto winter and global energy crisis, down about 72% from last November when miners were racking up $62 million a day, according to data from Blockchain.com.
"Bitcoin miners have continued to watch margins compress – the price of bitcoin has fallen, mining difficulty has risen and energy prices have soared," said Joe Burnett, head analyst at Blockware Solutions.
That's put serious pressure on some players who bought expensive mining machines, or rigs, banking on rising bitcoin prices to recoup their investment.
Bitcoin is trading at around $19,000 and has failed to break above $25,000 since August, let alone regain November's all-time high of $69,000.
At the same time, the process of solving puzzles to mine tokens has become more difficult as more miners have come online. This means they must devour more computing power, further upping operating costs, especially for those without long-term power pricing agreements.
Bitcoin miners' profit for one terahash per second of computing power has fluctuated between $0.119 and $0.070 a day since July, down from $0.45 in November last year and around its lowest levels for two years.
The grim state of affairs could be here to stay, too: Luxor's Hashrate Index, which measures mining revenue potential, has fallen almost 70% so far this year.
2140: THE LAST BITCOIN
It's been painful for miners.
Shares of Marathon Digital (MARA.O), Riot Blockchain (RIOT.O) and Valkyrie Bitcoin Miners ETF (WGMI.O) have sunk more than 60% this year, for example, while crypto-mining data center operator Compute North filed for bankruptcy last week.
Yet mining is ultimately a long-term proposition – the last bitcoin is expected be mined in 2140, more than a century away – and some spy opportunity in the gloom.
"The best time to get in is when market's low, the same mining rigs that went for $10,000 earlier this year you can get that for 50% to 75% off right now," said William Szamosszegi, CEO of Sazmining Inc which is planning to open a renewable-energy powered bitcoin mining operation.
Indeed, many miners are cutting back on buying rigs, forcing makers to cut prices.
For instance, the popular S19J Pro rig sold for $10,100 in January on average, but now sells for $3,200, analysts at Luxor said, also noting prices for bulk orders of some mining machines had fallen by 10% in just the past week.
Chris Kline, co-founder of crypto investment platform Bitcoin IRA, said miners would have to be "hyper-focused" on energy efficiency, both to bring costs down and to avoid any repercussions from climate change-related regulations.
"From managing their balance sheet, processing units and energy costs, miners will look to stay afloat regardless of current market conditions," he added.
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Crypto companies were undeterred by initial failure to obtain licences to operate in Britain and were submitting new applications, the Financial Conduct Authority said on Thursday.
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Crypto market volatile; Terra Classic Lunc leads the laggards, Bitcoin above $19k | Mint – Mint

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  • The American currency scaled past the 111 level against a basket of currencies — making cryptocurrencies against the greenback vulnerable as well. Currently, there is a steep plunge in trading volumes of cryptocurrencies.

Cryptocurrencies are trading volatile tracking feeble global equities after recession fears in major economies like the US and Europe sparked. The US Fed’s aggressive approach to tame inflation at the cost of economic growth further dampened the mood. Fed has hiked the rate by another 75 basis points. Wall Street and European stocks slipped sharply last week, while energy prices settled lower and bond yields climbed to multiyear highs. The American currency scaled past the 111 level against a basket of currencies — making cryptocurrencies against the greenback vulnerable as well. Currently, there is a steep plunge in trading volumes of cryptocurrencies.
On CoinMarketCap, at the time of writing, the global crypto market is at $939.57 billion up by 0.28% over the last day. However, total crypto market volume dropped nearly 37% over the last 24 hours and is at $49.82 billion.
Meanwhile, the total volume in DeFi is currently at $3.11 billion — 6.25% of the total crypto market 24-hour volume. The volume of all stablecoins is now $45.65 billion which is 91.63% of the total crypto market 24-hour volume.
Ethereum is the top trending cryptocurrency today followed by PancakeSwap and XRP.
The crypto leader Bitcoin is trading at a little over 19,000 mark at $19,090 up by 0.5%. Its market cap is nearly $366 billion. The digital coin’s dominance is currently up by 0.12% over the day at 38.95%.
Meanwhile, the second largest cryptocurrency Ethereum is performing near $1,331 and is up by 0.75%. Its market cap is around $163.3 billion.
Recently, Ethereum launched the most-awaited Merge which led to a transition of proof-of-stake consensus, officially deprecating proof-of-work and reducing energy consumption by ~99.95%.
Data from Coinglass showed that Ethereum has liquidated more than $759 million since September 15.
However, both Bitcoin and Ethereum have dipped by nearly 5% and 9% respectively in the last seven trading sessions.
Among top-performing cryptocurrencies in the last 24 hours are — Reserve Rights climbing by 9.5% followed by Chainlink up 5.5%. Algorand, Chiliz, and eCash surged by 4-5.5%.
On the other hand, Terra Classic Lunc took lead in the laggards list by plunging more than 7%, followed by XDC Network shedding nearly 5%, Stellar and DogeCoin tumbling more than 3% each. Axie Infinity, Helium, Nexo, Celsius, and Synthetix dived between 2-3%.
Terra tokens are under pressure as currently, Terraform Labs CEO Do Kwon is facing multiple jurisdictions. An arrest warrant has been issued by the Seoul Southern District Prosecutors Office against Kwon who is the forefather of TerraUSD algorithmic stablecoin and sister token Luna that wiped out reportedly $60 billion in the cryptocurrency market. Kwon’s whereabouts are unknown, although, the co-founder of Terra tokens denied rumours of being on the ‘run’ from government agencies.
Last week, US Fed in its latest policy statement said, “the Committee is highly attentive to inflation risks.”
FOMC further said, in support of these goals, the Committee decided to raise the target range for the federal funds rate to 3 to 3-1/4 percent and anticipates that ongoing increases in the target range will be appropriate. In addition, the Committee will continue reducing its holdings of Treasury securities and agency debt, and agency mortgage-backed securities, as described in the Plans for Reducing the Size of the Federal Reserve’s Balance Sheet that was issued in May.
FOMC is committed to returning inflation to its 2% objective.
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Bitcoin news – live: Price crash continues as crypto ‘stable’ coin UST uncouples from dollar – Yahoo News

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