Following the accusations against the BitMEX exchange, the price of Bitcoin dropped by 4%. Bitcoin shows its strengths as money in contrast to the weakness of the US dollar.

In recent days, the CFTC accused BitMEX of violating anti-money laundering regulations and operating illegally in the United States. That accusation had an impact on the market that was reflected in the withdrawal of more than 48,000 BTC from BitMEX in a few hours. Additionally, the main cryptocurrency exhibited a drop of close to 4%, down to USD 10,480.

Larry Cermak, director of research at Decrypt, said on Twitter that the implications of this accusation would be “massive.” He states that there are major exchanges outside of the United States that allow US users to trade without KYC rules.

Analyst Willy Woo said that what happened to BitMEX could have a bullish impact on Bitcoin. “The CFTC has just announced that it is downgrading unregulated futures exchanges and their dominance in price. BTC is going up.”

Ray Dalio, Founder of Bridgewater Associates, the world’s largest hedge fund, believes that capitalism “does not divide the economic pie well” and that it is not working “efficiently and effectively enough for everyone.”

The investor stresses that the United States should make adequate decisions to provide better opportunities for its citizens. He considers that, in this way, there would be “no painful consequences for the country.”

Intrinsic Value of Bitcoin

The analyst team at the Kraken exchange recently published a study on the intrinsic value of Bitcoin. In it, they examine diverse approaches to the inherent value of the main cryptocurrency. Likewise, they explore how the different definitions of value could extend to Bitcoin.

The study highlights that it is necessary to take into account intangible aspects within Bitcoin when evaluating its intrinsic value. The study particularly notes cryptography-based computational security, resistance to censorship, and its immutability and verifiability, among others.

The analysts explain how Bitcoin meets the seven characteristics that fiat money complies with, according to the St. Louis Federal Reserve: durability, portability, divisibility, uniformity, limited supply, and acceptability. Furthermore, they add that a robust network, with the aforementioned intangibles, backs Bitcoin.

Gold no longer backs the US dollar, but the latter “is desirable because of confidence in its sovereign status.” Kraken’s study argues that Bitcoin is desirable because of the strength of its network or “ecosystem.” The authors say that “Bitcoin has built its reputation as the most cryptographically secure, decentralized, and widely adopted digital asset to ever exist.”

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Blockchain data analytics firm Glassnode highlights the percentage of BTC supply that BTC hodlers held three years ago, two years ago, and one year ago.

The percentage retained, for at least 3 years, is just under a third of the supply of Bitcoin, about 5.8 million coins. That percentage grew to 8.2 million BTC in one year. At the moment, the percentage of BTC that users have not moved, for at least a year, reaches 63.3%, that is, more than 11 million coins.

Bitcoin’s Resilience and the Fall of the US Dollar

Bitcoiners recently commented on the coincidence of events that could potentially push down the price of Bitcoin. To what happened to BitMEX, some added the news about the millionaire robbery at the Kucoin exchange.

Although these factors are potentially negative for Bitcoin, the price recently concluded at the USD 10,600 level and a 69-day record above USD 10,000.

According to an up-to-date economic report, the apparent gradual decline in the value of the US dollar strengthens Bitcoin as a store of value alternative. Recent money printing measures and the massive aid scheme that the Fed launched appear to have led to that loss of power. In the short and medium term, these measures could accelerate the devaluation of the US dollar, which would translate into a revaluation of Bitcoin.

By Alexander Salazar

The draft regulation on cryptocurrencies imposes strict rules on stablecoins. Regulating Bitcoin as a financial instrument “is a way to avoid qualifying it as money.”

The draft regulation that the European Commission (EC) is preparing seems to reconcile the view that separates blockchain from crypto assets. However, the new legal framework treats cryptocurrencies similarly to stock market products.

According to the specialist in Technology and Innovation, Alberto Gómez Toribio, the objective is to discuss the European draft regulations on crypto assets (Markets in Crypto-Assets or MICA).

Gómez believes that the European Union (EU) project responds to the need to regulate the sector in the region. Cristina Carrascosa, from law firm Pinsent Masons, says that “companies should not continue to operate like in the ‘far west’”. For her part, Idoya Arteagabeitia, from the same company, emphasizes the competitive advantages of homologation standards for the EU.

However, Gómez mentions issues that he considers to be a matter of concern for the ecosystem. He notes that it is positive to speak openly about crypto assets, but he sees an attempt to pigeonhole the activity of the cryptocurrency industry.

According to the technology specialist, it is relevant to understand “that the products and services that appear on the cryptocurrency market are not the same as those on the stock market and different principles govern them.”

European Commission and Its Emphasis on Stablecoins

Concerning the general requirements of the project, Idoya Arteagabeitia explains that it is a drastic change. After not having any regulation, now it is necessary to comply with many regulations.

The lawyer specializing in crypto assets acknowledges that “this will be more difficult to comply with for some companies.” However, they could have “a period of 18 months to make adjustments.”

The expert reaffirms that pegged cryptocurrencies or stablecoins must meet the greatest demands. This occurs because these crypto assets track the price of other assets or fiat currency, such as the US dollar and the euro.

The draft regulation notes that to operate in Europe, the issuers of these assets will have to apply for a license. They should also make clear the mechanisms for asset backing in a technical document, which the authorities should review and approve.

The European Commission argues that stablecoins resemble electronic money. According to Gómez, Spain, France, Italy, Germany, and the Netherlands support the European Commission’s regulatory plan and request strong rules on stablecoins.

Bitcoin Is Out of the Concept of Crypto Assets and Money

Spanish lawyer Javier Maestre gives his opinion on the definition of crypto assets that the European Commission puts in the document.

The draft regulation defines a crypto-asset as “a digital representation of value or rights that users can transfer and store electronically, using distributed ledger technology.”

According to Maestre, Bitcoin could fit this definition. However, he says that the European Banking Authority seems to be avoiding mentioning the “concept of unit of account,” thereby recognizing the pioneering cryptocurrency as money. Likewise, it adds that there was a recommendation to change the term “means of payment” to “means of exchange.”

Progress in Regulation of Cryptocurrencies and Risk of Lagging

The document only seeks to regulate three types of tokens: stablecoins (classified as tokens referenced to electronic asset and token money) and utility tokens.

Idoya Arteagabeitia admits that there are still many ecosystem themes that they should add to the document. “It may happen later, but the work of the EC tends to be slow. For that reason, there is a risk of lagging, especially if it receives the approval in a few years.”

The experts acknowledge that the regulation is an important step forward for regulation in Europe. Cristina Carrascosa thinks that it will favor cryptocurrency users, SMEs, and startups. Meanwhile, Arteagabeitia says that there should be a unification of regulatory criteria throughout Europe.

By Alexander Salazar

According to Glassnode, the number of BTC wallets with a positive balance has reached 31 million. This figure represents a new all-time high in the number of Bitcoin addresses that have a credit balance.

The digital asset Bitcoin has given several surprises to enthusiasts in the crypto market in 2020. However, the cryptocurrency has once again attracted attention, reaching a new all-time high in the number of addresses with a positive balance.

Last July, the firm Glassnode noted that the number of new Bitcoin addresses per hour had hit an all-time high. These reached 22,390,500, exceeding the peak of 22,387,083 the previous month. At that time, the number of active addresses also hit an annual high of 60,379,667.

On this occasion, the firm presents a new all-time high of the digital asset that exceeds 31 million addresses with a positive balance. In other words, those are the addresses that store bitcoins, even in tiny amounts, in a stable way.

Growth in Number of BTC Wallets

In early 2017 and late 2018, it was possible to perceive the existence of a speculative bubble. At that time, the number of addresses with a positive balance reached a first all-time high, somewhat similar, of just over 28 million. However, this figure subsequently declined considerably.

The lowest peaks began to appear in March and July 2018, in particular, when the number of such addresses decreased, reaching 21 million.

However, before people started talking about the speculative bubble of late 2017, that amount was 18 million. For that reason, even after the bubble burst, the numbers never showed such a dramatic decline again. Until March of last year, there were no more than 23 million addresses with a positive balance, but there has been a constant and sustained growth since then.

There were more than 24 million addresses by late April 2019, while just over 25 million were in existence by late May. However, the January 2018 peak of 28 million had to wait almost two years, until December 2019, when said number of new accounts showed a new decrease.

The number of addresses only exceeded 29 million in the second month of this year. Unlike other occasions, this number did not drop dramatically, even during the global collapse of financial markets in mid-March.

Bitcoin addresses with a positive balance stopped showing a steady increase in number, to make a small halt. However, they did not reverse the trend. On April 30^th, the number of addresses managed to go beyond the 30 million limit for the first time. Four months later, on August 27^th, it again managed to exceed said mark with 31 million addresses containing Bitcoin.

There is still no new record for the number of daily active addresses. The latest all-time high in this area occurred around the second week of December 2017, just at the height of the aforementioned speculative bubble. At that time, the number of individual Bitcoin addresses active in 24 hours period managed to exceed 1 million on two occasions.

By Alexander Salazar

Both parties must present a joint agreement between now and October 20^th. The judge argues that his decision is based on the Howey test.

In its express trial against the Initial Coin Offering (ICO) of the instant messaging service Kik, the US Securities and Exchange Commission (SEC) scored a victory. A judge stated that Kik violated the Securities Law by trading the KIN token without his approval, thereby agreeing with the regulatory entity.

Alvin Hellerstein, a judge for the Southern District of New York, explained that courts rely on all three arguments in the Howey Test. It allows them to determine whether or not a sale of this type is trading of securities.

The Howey Test is a way of determining whether the provision of a service gives rise to an investment contract. It has three guidelines: a sale of securities occurs if there is an investment of money if there is a common company and if there are expectations of making profits that derive only from the efforts of others.

“Kik admits that its issuance of KIN involved an investment of money whereby participants bought or acquired Ether (ETH) and traded Ether for KIN,” the judge said. For that reason, “the parties agree that the trading of the token meets the first element of the Howey test.” The parties are still discussing whether it meets the other two elements of the Howey test, but the judge argues that it does.

The SEC and Kik agreed to this judicial process, so it is not a traditional trial but rather an express trial. The ruling comes six months after the commission and the Canadian company Kik Interactive agreed to decide the case as soon as possible.

The ICO That Annoyed the Securities Commission

Kik conducted the ICO for the KIN token in two phases in 2017. The first part traded, between June and September, USD 50 million worth of tokens on a private pre-sale to 50 investors. The second part occurred that same September with a public offering that raised USD 49.2 million.

The problem arose when Kik announced KIN since the commission had not yet established its guidelines to regulate this type of operation. Kik Interactive defended itself by saying that the token is “truly a currency,” since it serves as a form of payment for more than 30 mobile device applications.

Judge Hellerstein agreed with the SEC, but the express trial does not end there. Both parties must reach an agreement and present a joint sentence between now and October 20^th. Kik will need to mention whether it will return the funds to investors, pay a fine, or both.

The messaging service Kik Interactive, also known as Kik Messenger, announced the closure of operations in September 2019. At the time, there was information that it would continue in the business of messaging and would develop its token through KIN. It kept both operations in parallel for a few weeks.

By Alexander Salazar

Users have transferred around USD 500 million worth of BTC off the exchange. Other exchanges such as Binance and Gemini also record massive withdrawals.

There have been withdrawals for more than 37,000 BTC (equivalent to USD 500 million) from the BitMEX exchange in just a few hours. Before that, the US Commodity Futures Trading Commission (CFTC) accused the exchange of violating anti-money laundering regulations and offering illegal trading services.

According to data from CoinMetrics, the exact number of bitcoins that users have transferred to other addresses off BitMEX reaches 37,772 BTC. Taking into account the current price of the main cryptocurrency, which is around USD 10,500, the analysis firm shown a multi-million dollar amount.

CoinMetrics recently posted on Twitter that “there have been withdrawals of over 37,000 BTC from BitMEX since the CFTC’s announcement, while Binance and Gemini together have received over one-third of the withdrawals.” The number of BTC withdrawals on Binance reaches 6,475, while on Gemini it is 6,235. In other words, they both add up to one-third of the number of withdrawals on BitMEX. After CoinMetrics published its message, the figure went up another 10,000 BTC.

In another message, CoinMetrics also noted that what happened with BitMEX left a record in terms of withdrawals in BTC. This is the biggest negative change that the exchange has shown regarding its balance in the main cryptocurrency.

According to data estimates from Glassnode, BitMEX kept around 170,000 BTC in its wallets, close to 1% of the total amount of BTC in circulation. Concerning the 47,000 BTC that users withdrew, the amount would represent 28% of the total amount of bitcoins in their wallets.

On its Twitter account, CoinMetrics added that “that is the highest hourly outflow from BitMEX that we have seen so far.”

There was also an influence on the price of Bitcoin as a consequence of the CFTC’s decision on BitMEX. The first cryptocurrency exhibited a drop of close to 4% on September 2^nd, compared to its price the day before when it was around USD 10,900.

What happened with the exchange created a stir within the Bitcoin ecosystem. In addition to the CFTC’s decision, the Department of Justice charged its co-founders and the head of business development with violating the bank secrecy law.

Samuel Reed, one of the co-founders, is under arrest and is due to appear in court soon. The two agencies have also accused the CEO of the company, Arthur Hayes; the other co-founder, Ben Delo; and the Head of Business Development, Greg Dwyer.

Given the seriousness of the situation, CFTC Chairman Heath Tarbert noted that exchanges that break the law cannot gain an advantage over those that do comply with the rules.

Users have also made strong withdrawals from the following exchanges: OKEx (2,609 BTC), Bitstamp (785 BTC), Deribit (675 BTC), Kraken (645 BTC), and Huboi (513 BTC). From the above, it is possible to conclude that Bitcoin users always try to leave exchanges that they cannot trust.

By Alexander Salazar

Ray Dalio argues that money printing and debt should be of concern for investors. He also recommends diversifying portfolios and being very cautious about cash.

Ray Dalio is the founder of Bridgewater Associates, the largest hedge fund in the world. He believes that capitalism “does not divide the economic pie well” and that it does not work “efficiently and effectively enough for everyone.” The executive says that the United States must make appropriate decisions to provide better opportunities for its citizens.

Dalio states that capitalism is better than socialism at increasing productivity to increase the size of the economy. However, he believes that “capitalism and capitalists are not good at distributing the cake of economic opportunity.”

The investor anticipates that within the next five years foreigners who have given loans to the United States will no longer want to do so. “Then people worldwide would not accept the US dollar as easily as they do now,” said Dalio.

The hedge fund manager thinks that there will be a drastic change in the world within five years if no one solves these three issues. First, he raises the relationship between money and debt, the retention of the value of the US dollar, the maintenance of the increasing spiral of expenses, and debt in the face of declining production. “If there is no demand for the US dollar due to the loss of its hegemonic position in the rest of the world, its price will fall and the entire US economy will collapse.”

Concerning wealth, he is not clear about how to solve the existing gaps. He does not know if there will be confrontations or negotiation avenues that will emerge to close these gaps. Finally, he wonders about the way to handle the rise of a great power in China that is challenging the United States.

The economic system must undergo entire reengineering to face these contingencies, Dalio argues. Otherwise, it would be necessary to face the expenses that will grow in an excessively, and the creation of debt that “will be unpayable.” He affirms that the country is very close to that happening since people are “living with money that they owe.”

Dalio Recommends Caution with Cash

To help investors protect their portfolio and take advantage of market opportunities, Dalio recommends a proactive strategy. He tells them that they should worry about the value of money and investments.

Two worrying factors must be money printing and debt rising, according to Dalio. That is precise “what has raised the price of assets such as stocks and gold.”

According to the founder of Bridgewater Associates, knowing how to diversify is also advisable, since “wealth is not destroyed when it moves.” The solution is good diversification, while the investor must be vigilant about the value of cash.

Last April, Ray Dalio predicted that the upcoming economic crisis would have worse consequences than the 2008 US recession. On that occasion, the Gross Domestic Product (GDP) of the country fell by 4.3% due to the collapse of the real estate market. This situation gave rise to Bitcoin as the first cryptocurrency.

The Federal Reserve (FED) is artificially inflating the markets, so the conventional metrics to analyze them are no longer in effect. That could lead to the displacement of the US dollar as the reserve currency of the world, Dalio warned.

By Alexander Salazar