This classic trading pattern signaled that Bitcoin price had hit a top

Traders tend to focus too much on timing the right entry to a trade, but very few focus on developing a strategy for exiting positions. If one sells too early, sizable gains are left on the table and if the position is held for too long, the markets quickly snatch back the profits. Therefore, it is necessary to identify and close a trade as soon as the trend starts to reverse.One classical setup that is considered reliable in spotting a trend reversal is the head-and-shoulders (H&S) pattern. On the longer timeframes, the H&S pattern does not form often, but when it does, traders should take note and act accordingly.Let’s look at a few ways to identify the H&S pattern and when to act on it.Head-and-shoulders basicsThe H&S pattern forms after a bull phase and indicates that a reversal may be around the corner. As the name indicates, the formation consists of a head, a left shoulder, a right shoulder, and a distinct neckline. When the pattern completes, the trend usually reverses direction.Head-and-shoulders top pattern. Source: TradingViewThe above image shows the structure of an H&S pattern. Before the formation of the setup, the asset is in an uptrend. At the peak where the left shoulder forms, traders book profits and this results in a decline. This forms the first trough but it is not yet a strong enough signal to provoke a trend change. Lower levels again attract buying because the trend is still bullish and buyers manage to push the price above the left shoulder, but they are not able to sustain the uptrend. Profit-booking by the bulls and shorting by counter-trend traders pull the price down, which finds support near the previous trough. Joining these two troughs forms the neckline of the setup.As the price rebounds off the neckline, the bulls make one more attempt to resume the uptrend but as the price reaches the height close to the left shoulder, profit-booking sets in and the rally fizzles out. This lower peak forms the right shoulder and is usually in line with the left shoulder. The up-move reverses and the selling picks up momentum. Finally, the bears succeed in pulling the price below the neckline. This completes the bearish pattern and the trend reverses from bullish to bearish.Spotting trend reversals with the H&S patternBTC/USDT daily chart. Source: TradingViewBitcoin (BTC) started a strong up-move after breaking out at $20,000 in December 2020. The BTC/USDT pair hit a local peak at $61,844 on March 13 and the price corrected, forming a trough on March 25. This local peak was the left shoulder.The bulls considered the dip as a buying opportunity because the trend was still up. Aggressive buying then pushed the price above $61,844 and the pair hit a new all-time high at $64,854 on April 14. This level attracted selling, which pulled the price down to form the second trough on April 25. The middle peak, higher than the other peaks, formed the head.Another attempt by the bulls to resume the uptrend failed on May 10. This formed the right shoulder and the ensuing correction broke below the neckline of the pattern. The breakdown and close below the neckline on May 15 completed this bearish setup.Sometimes, after the breakdown, the price retests the breakdown level from the neckline but when the momentum is strong the retest may not happen, an example which is shown in the chart above.BTC/USDT daily chart. Source: TradingViewTo calculate the pattern target of this setup, determine the distance from the neckline to the top of the head. In this case, the value is $15,150. This distance is then subtracted from the breakdown point on the neckline to arrive at the minimum target objective. In the above example, the breakdown happened close to $48,000. This projected a pattern target at $32,850. This figure should be used as a guide because sometimes the decline exceeds the target, and in other scenarios the down move ends without reaching the target objective.Head-and-shoulders sometimes fail Sometimes traders jump the gun and take counter-trend positions before the price breaks below the neckline of the developing H&S formation. Other times, the break below the neckline does not see follow-up selling and the price climbs back above the neckline. These instances may lead to failed setup, trapping the aggressive bears who are forced to cover their positions and this results in a short squeeze.ADA/USDT daily chart. Source: TradingViewCardano (ADA) started an uptrend from the $0.10 level on Nov. 20, 2020. The uptrend hit resistance in the $0.35 to $0.40 zone in January and a H&S pattern started developing. The price dipped to the neckline on Jan. 27, but the bears could not sink and close the ADA/USDT pair below the support.When the price rebounded off the neckline on Jan. 28, it was a signal that the sentiment remained bullish. There was a minor hiccup on Jan. 30 and 31 when bears attempted to stall the up-move near the right shoulder but sustained buying from the bulls pushed the price above the head on Feb. 1. This break above the head of the pattern invalidated the setup. ADA/USDT daily chart. Source: TradingViewWhen a bearish setup fails, it catches several aggressive sellers on the wrong foot. This results in a short squeeze and propels the price higher. The same thing happened in the above example and the pair soared in February.Key takeawaysThe H&S pattern is considered a reliable reversal pattern but there are some important points to bear in mind.A downward sloping or flat neckline is considered to be a more reliable pattern compared to an upsloping neckline. Traders should wait for the price to break down and close below the neckline before initiating trades. Pre-empting the setup could result in losses because a failed bearish pattern could result in a strong rally.The pattern targets should only be used as a guide because sometimes the price may overshoot and continue the down move and at other times it may reverse direction before reaching the target objective.The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

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SpaceX owns BTC, daily Dogecoin volume soared to nearly $1B in Q2, Grayscale eyeing DeFi and ETF: Hodler’s Digest, July 18–24

Coming every Saturday, Hodler’s Digest will help you track every single important news story that happened this week. The best (and worst) quotes, adoption and regulation highlights, leading coins, predictions and much more — a week on Cointelegraph in one link.Top Stories This WeekSpaceX owns Bitcoin, Elon Musk and Nic Carter believe BTC is becoming greenerElon Musk, Dogecoin (DOGE) proponent and fair-weather friend to Bitcoin (BTC), revealed for the first time on July 21 that his aerospace firm SpaceX owns an undisclosed amount of Bitcoin. “I do own Bitcoin; Tesla owns Bitcoin; SpaceX owns Bitcoin,” he said.  Musk was speaking at “The ₿ Word” — a virtual event dedicated to Bitcoin — alongside Twitter CEO Jack Dorsey and Ark Invest CEO Cathie Wood, and the erratic tech billionaire suggested Tesla was on the verge of accepting the cryptocurrency again following promising signs that the percentage of renewable energy used for mining was increasing.Tesla’s $1.5 billion foray into Bitcoin earlier this year sparked a major BTC price rally. However, Tesla’s suspension of Bitcoin as a payment method over environmental concerns in May appeared to tank the price of Bitcoin, with BTC crashing around 40% over the past two months.  Now that there is a diminishing Chinese coal-powered hash rate after the mining ban, it appears that Musk is warming up to digital gold again. Musk has stated that, after he does a bit more “due diligence” on mining sustainability and can confirm it’s backed by 50% renewables or more, Tesla may re-enter the market. One wonders what said due diligence this entails, and why he didn’t do it before the $1.5 billion Tesla BTC buy. Musk also revealed, for the first time, that he holds Ethereum (ETH), and unsurprisingly reaffirmed his support for the meme-inspired Dogecoin. “I do personally own a bit of Ethereum, and Dogecoin of course,” he said.Daily Dogecoin volume soared to nearly $1B during Q2Speaking of Musk’s favorite cryptocurrency, trading volume for Dogecoin increased by more than 13 times during the second quarter of 2021, nearly tagging $1 billion daily.According to data compiled by Coinbase and reported by Business Insider, Dogecoin trading volumes soared 1,250% between April and June, with $995 million worth of DOGE changing hands daily on average during the quarter.By comparison, Dogecoin’s average daily volume for the first quarter of 2021 was $74 million.While those figures are sure to spark hype among the fiery-eyed Dogecoin community, the subject of the top canine coin may be a touchy one for Coinbase. A Coinbase user has filed a class-action lawsuit seeking $5 million in damages because of an allegedly misleading Dogecoin campaign.According to court documents, plaintiff David Suski said he was deceived into trading $100 of Dogecoin for entry into a $1.2 million sweepstakes offer on Coinbase. The lawsuit asserts that Coinbase failed to communicate that a person could enter the sweepstakes without purchasing $100 of Dogecoin.Ethereum must innovate beyond just DApps for DeFi degens: Vitalik ButerinEthereum co-founder and lead developer Vitalik Buterin has urged the Ethereum community to innovate beyond the confines of decentralized finance, or DeFi.Buterin was speaking during his keynote at the Ethereum Community Conference in Paris on July 21, and described non-financial utilities as “the most interesting part of the vision of general-purpose blockchains.”The 27-year-old outlined several non-financial applications for Ethereum, including decentralized social media, identity verification and attestation, and retroactive public goods funding.The Ethereum co-founder has had a busy week, and after speaking at the Ethereum conference, he also surfaced in Ashton Kutcher’s and Mila Kunis’ living room. He wasn’t trespassing of course, and was there as part of the promotion for Kunis’ NFT project dubbed “Stoner Cats.” Buterin launched into a lengthy explanation of Ethereum’s fundamental components and articulated how the smart contract protocol differs from “single-purpose” chains such as Bitcoin.Grayscale sets sights on institutional DeFi fundWhile Buterin is looking beyond the decentralized bounds of finance, digital asset management giant Grayscale is looking to gain exposure in the sector.  On July 19, Michael Sonnenshein, CEO of Grayscale, announced a new investment vehicle aimed at DeFi assets.In an interview with CNBC’s Squawk Box, the CEO chimed in to announce Grayscale’s plans for a DeFi Fund and index. Detailing the purpose of the new product, the Grayscale CEO said the fund would offer exposure to DeFi assets, such as Uniswap and Aave, for its institutional clients.During the same week, Sonnenshein stated he thinks that only a “couple of maturation points” separate the United States from its first Bitcoin exchange-traded fund, or ETF.After many rejections of BTC ETFs in the past, along with 13 ETF applications under consideration, Sonnenshein is undeterred and said the firm is “100% committed” to transforming its Bitcoin product, the Grayscale Bitcoin Trust, into an ETF once conditions are right.US lawmakers don’t want Olympic athletes to use digital yuan at 2022 gamesDespite the majority of Japanese citizens reportedly wanting the Olympics canceled over pandemic-related concerns, the event is going ahead.The U.S. government has already got its eyes on the 2022 Winter Olympics in Beijing, however, and three U.S senators signed a letter urging Olympic officials to forbid American athletes from using the digital yuan during the upcoming event earlier this week.In a July 19 letter to the U.S. Olympic and Paralympic Committee board chair Susanne Lyons, Republican Senators Marsha Blackburn, Roger Wicker and Cynthia Lummis, also a BTC proponent, requested that officials prevent U.S. athletes from using or accepting the digital yuan.The senators asserted that the athletes’ use of the central bank digital currency can be “tracked and traced” by the People’s Bank of China.The senators stated that the Chinese government recently rolled out new features for the digital yuan, giving officials the ability “to know the exact details of what someone purchased and where.”If Olympic officials approve of the request, China will, unfortunately, have to deploy other methods to track and trace the U.S. athletes that do enter the country.Winners and LosersAt the end of the week, Bitcoin is at $32,580, Ether at $2,070 and XRP at $0.60. The total market cap is at $1.35 trillion, based on CoinMarketCap data.Among the biggest 100 cryptocurrencies, the top three altcoin gainers of the week are Telcoin (TEL) at 26.82%, SushiSwap (SUSHI) at 26.17%, and Axie Infinity (AXS) at 23.12%.The top three altcoin losers of the week are Mdex (MDX) at -25.55%, THORChain (RUNE) at -18.98%, and Theta (XDC) at -11.26%.For more info on crypto prices, make sure to read Cointelegraph’s market analysis.Most Memorable Quotations“I might pump, but I don’t dump. I definitely do not believe in getting the price high and selling it or anything like that.”Elon Musk, Tesla CEO“Moving beyond DeFi is not about being against DeFi. I actually think […] the most interesting Ethereum applications are going to combine elements of finance and non-finance.” Vitalik Buterin, Ethereum co-founder“Neither USDC nor Tether is a regulated digital asset, for the simple reason that neither token has a regulator. In fact, neither USDC nor Tether tokens are ‘stablecoins’ in anything other than name.”Paxos, stablecoin provider“I think that digital art is probably going to last a lot longer than galleries. I mean, you probably won’t be going into galleries. We’ll be sitting in bars showing each other what we’ve recently bought on our phones, and that’s kind of what we do now.” Damien Hirst, world-renowned contemporary artist“Make no mistake: It doesn’t matter whether it’s a stock token, a stable value token backed by securities, or any other virtual product that provides synthetic exposure to underlying securities. These platforms — whether in the decentralized or centralized finance space — are implicated by the securities laws and must work within our securities regime.” Gary Gensler, SEC Chair“More than ever, we need to take advantage and harness the potential of these new technologies to ensure that we are better equipped and more united in the future, in order to make our planet a more livable, equitable place for all.” Irakli Beridze, head of the Centre for Artificial Intelligence and Robotics at the United Nations Interregional Crime and Justice Research Institute“If a Bitcoin ETF is coming through the Gensler administration, my view is it’s not going to happen this year. […] There’s also been quite a bit of sort of a body of language and rhetoric and points that have been made by the staff with previous applications that need to be addressed. And so this isn’t a slam dunk.” Greg King, CEO of Osprey Funds“Recent calls to establish a more appropriate standard for technologically complex digital assets have turned into a firestorm since the Ripple case was filed. Some tech policy experts closely following the case have called for a ‘Ripple Test’ to replace Howey.” George Nethercutt Jr., former member of U.S. CongressPrediction of the Week $13K Bitcoin price predictions emerge with BTC falling below historic trendlineEver since the crypto downturn began around May 12, the bears have been on parade as they forecast doom and gloom for the future price of BTC. This week, Cointelegraph reported that a pseudonymous chartist who goes by the name “Bitcoin Master” shared concerns about Bitcoin’s potential to undergo an 80% average price decline upon breaking bearish on its 50-day simple moving average (SMA). The analyst noted that if the said fractal plays out, BTC/USD exchange rates could crash to as low as $13,000.The 50-week SMA represents the average price traders have paid for Bitcoin over the past 50 weeks. Over the years, and in 2020, its invalidation as price floor has contributed to pushing the Bitcoin market into severe bearish cycles.However, previous market cycles haven’t been impacted by Elon Musk’s inclination to cause mayhem in crypto through his tweets, so we may see a 50-week Musk tweeting average become the accepted method for BTC price predictions in the future.FUD of the Week SEC Chairman says cryptocurrency falls under security-based swaps rulesThe United States Securities and Exchange Commission, or SEC, may soon issue new rules for the regulation and registration of security-based swaps, including cryptocurrency.In a speech to the American Bar Association Derivatives and Futures Law Committee, SEC Chairman Gary Gensler outlined that, from November, new requirements will go into effect, which include internal risk management, supervision and chief compliance officers, trade acknowledgment and confirmation, and recordkeeping and reporting procedures, to name a few. “Make no mistake: It doesn’t matter whether it’s a stock token, a stable value token backed by securities, or any other virtual product that provides synthetic exposure to underlying securities. These platforms — whether in the decentralized or centralized finance space — are implicated by the securities laws and must work within our securities regime,” Gensler said.Auditors reveal USDC backing as Jim Cramer sounds alarm over Tether’s mad moneySpeaking during a July 20 interview with TheStreet, Jim Cramer, the host of CNBC’s Mad Money, questioned Tether’s lack of transparency and asked why the firm hasn’t disclosed the composition of its commercial paper, which accounts for a large percentage of its holdings. Tether’s brief reserve breakdown in May showed that, as of March 31, three-quarters of its reserves were held in cash, cash equivalents, other short-term deposits and commercial paper. Within that category, commercial paper accounted for 65.39%, with cash alone accounting for just 3.87%. “I am concerned about Tether, and I’m not gonna stop sounding the alarm until I know what Tether has. They’ve got about $60 billion in commercial paper. Tether, open up the kimono, what commercial paper do you own?” Cramer said.Crypto is an ‘untested asset category,’ says UBS CEO Ralph HamersRalph Hamers, CEO of Swiss bank UBS, said on July 20 that he does not fear missing out on crypto, citing that it’s an untested and volatile asset.  Speaking to Bloomberg, Hamers asserted, “Clients are looking at different alternatives, and they hear about crypto, and there is a bit of a fear of missing out as well. They read it in the papers, but they also see the volatility.”Commenting on the bank’s approach to providing exposure to crypto for its wealth management clients, the UBS CEO emphasized that he holds no FOMO towards crypto, noting, “We don’t offer it actively. […] We feel that crypto itself is still an untested asset category.”Hamers, of course, works within the confines of the traditional finance and banking system, which is a well-tested industry that has caused multiple global financial crises.Best Cointelegraph FeaturesStock-to-flow model possibly invalidated as Bitcoin price loses $30KPlan B’s stock-to-flow model is the closest it’s ever been to being invalidated as Bitcoin stagnates in the $30,000 range.China is pumping money out of the US with BitcoinChinese authorities seem to be putting things in order rather than declaring war on crypto, aiming to further weaken the U.S. economy.It is time for the US to create a ‘Ripple test’ for cryptoThe SEC’s approach to crypto must be modified to more clearly articulate how securities laws should apply to digital assets.

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The future of art? World-famous artists delve into NFTs

For millennia, the world of art has remained unchanged for the most part. The tradition has always revolved around artists selling their work to museums, galleries, or individual collectors. In return, the artist would get a market value for their work which was often kept in private vaults and only displayed to the public ever so often.With the advent of NFTs, many artists are now able to take their work and offer it up for sale as a digital collectible. Through these blockchain-enabled digital assets, the artist cannot only maintain ownership of a piece of the art they produce but also gain royalties from sales made in secondary markets.Undoubtedly, NFTs are changing the contemporary art scene as artists no longer have to rely on galleries and museums as their sole medium through which they can sell their work. This shift in perspective has allowed for greater freedom and choice in the artists’ work while also bringing in new audiences and a new stream of traditional artists to NFTs.Here is a look at the most famous contemporary artists that have gotten into NFTs lately.Damien HirstHirst recently launched “The Currency” project that consists of 10,000 NFTs corresponding to physical prints of his five-year-old artwork now stored in vaults. The NFTs will cost buyers $2,000 per piece and will be available for purchase by the end of the month.NFTs are changing the world and the art world is increasingly looking toward crypto, however, for Damien Hirst, it’s not all about a get-rich-quick scheme that is portrayed all over the media. The English artist and entrepreneur was once one of the youngest contemporary artists to dominate the U.K. art scene in the 1990s and is the region’s richest living artist, according to reports.[embedded content]The Currency project is set to blur the lines between fungibility and nonfungibility (especially money and art), as collectors of Hirst’s NFTs will have the choice of either getting the physical painting or the NFT version of the painting. The NFT will be a high-resolution photo of the physical painting.In an interview with Cointelegraph, Hirst said that he used to give a lot of art away and he would get frustrated whenever people would sell the art.“I suppose this whole project is like a test. It’s like when you walk downstairs in your house if you got a painting and it’s not long before the spot represents a dollar sign.”Related: British artist Damien Hirst uses NFTs to blur the boundaries between art and moneyOther highlights of Hirst’s work include a 2008 sale of the “Always Beautiful Inside My Head Forever” project that sold for over $220 million in a direct sale at an auction, as well as the “For the love of God” project that entailed a diamond-encrusted skull which sold for $100 million.In an interview with Cointelegraph, Hirst said that he was annoyed by applications such as iTunes that take ownership away from musicians and applauded NFTs for their contribution in helping artists maintain ownership of their creations.Related: British art icon Damien Hirst to accept BTC, ETH payments for print runPhilip ColbertWith a strong background in contemporary art as well as graphic design, Colin Philip Colbert was already a recognized rising star of the pop art world before he joined the NFT space. The British contemporary artist has even gone as far as receiving the praise of legendary designer André Leon Talley. Colbert got his start as an undergrad at the University of St Andrews in Scotland before moving to London’s then-emerging East End arts scene where he conceptualized the project that would become Lobsteropolis.Based on Colbert’s initial Lobster University project, Lobsteropolis is a digital city built on Decentraland’s blockchain-based virtual world, featuring composite elements of Colbert’s work from several international art exhibitions, shows and museums.The ambitious project offers a rare glimpse into an emerging industry that features an intersection between blockchain technology and the art world. It also features an open virtual world environment that allows people to interact with one another and the art.Already, Colbert’s work has attracted the praise of famous personalities in the world of art, including Simon de Pury, a world-renown art auctioneer and curator, and Charles Saatchi, a contemporary art collector and a businessman.Colbert said that the digital space enables him to explore the narrative of his art in a new way.One of Lobsteropolis’ most outstanding features is a hybrid artwork and musical performance feature titled Lob-Ster De-Vo which is a rock band-themed multimedia experience. The city is not just an art exhibition but an interactive virtual world as well. Lobsteropolis pushes the boundaries of both virtual and augmented reality in a gameplay experience that allows users to interact with their peers and create several layers of fantasy.Related: Bringing contemporary pop art to an NFT metaverseHuang Heshan“Bu Tu Garden” is Huang Heshan’s latest NFT-based real estate art that will be showcased at the Taobao Maker Festival. The young Chinese artist who initially assumed that everything blockchain-related would be “very complicated and troublesome to operate” admits to his surprise that working with nonfungible tokens is way easier.Huang will be launching his virtual “Bu Tu Garden” project at Taobao Maker Festival, which is an annual event that celebrates Chinese art and entrepreneurship. Taobao, an Alibaba-owned platform, will be showcasing NFTs for the first time since the beginning of the festival in 2016.Huang’s debut NFT art project is built on the NEAR blockchain protocol and is made of a virtual real-estate landscape that comprises more than 1,000 virtual structures, 300 high-end family villas and another 1,000 parasols.With a background in fine arts, Huang’s Bu Tu Garden takes after the local tastes of Chinese streets in a wild design filled with vibrantly colored trees, inspired by the story of a fictional real-estate tycoon who is dedicated to building up-market housing for the less fortunate.GrimesAnother artist who is making a debut into the NFT landscape is Grimes. Popularly known for her exploration of synth-pop music and experimental art, Grimes recently sold her digital artworks for a staggering $6 million in an auction on Nifty Gateway. The artwork includes a series of one-of-a-kind visual and audio artworks. One particular piece called “Death of the Old” sold for over $350,000. A bulk of the sales amounting to more than $6 million originated from individual pieces of art that comprised thousands of copies, selling for $7,500 each.Related: Musician Grimes’ debut NFT auction generates $5.8M in 20 minutesThe Canadian singer and visual artist already managed to be a critically-acclaimed pop star long before entering the NFT space. Her electronic pop music as well as her relationship with Elon Musk (tech CEO and entrepreneur) has brought her a large following of over 1.9 million people on Instagram. Through her NFT artwork, she showcases her versatile talent in writing, producing and editing her music.Steve Aoki and Antonio TudiscoAntoni Tudisco is a creative director and 3D visual artist who was born and raised in Hamburg, Germany. He boasts of a background in media management and web design and development, among other fields of study.The fashion enthusiast and designer has collaborated with top brands like Adidas, Nike, Versace and Puma, and garnered the attention of artists such as Will Smith. He also has his brand TUDISCO STUDIO, which he recently unveiled at a runway show in New York City.Now, Tudisco is making a debut into the NFT space by collaborating with American music producer and DJ Steve Aoki to create “Dream Catcher.”So far, the artwork has already earned more than $4.29 million and entails a collection of NFTs that can be redeemed in the form of a physical screen displaying the artwork. Apart from Tudisco, Aoki has also partnered with motivational speaker Tom Bileu in launching the “Neon Future” NFT set.The intersection of technology and artWhile modern art is becoming increasingly augmented with technology, some still believe that there will always be a place for traditional artwork in galleries and auction houses. However, one of the best aspects of NFTs is that they offer an opportunity for new artists to get a market for their art, especially for artists who are not able to enroll in prestigious fine art graduate programs. With NFTs, artists can sell their work directly to collectors and without the need for intermediaries. They no longer have to worry about geographical, financial and educational barriers. Is this the future of contemporary art?

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DeFi industry draws in commercial banks? Siam bets with $110M fund

While serious institutional interest in crypto is perhaps becoming more of an established trend than an emerging narrative, the focus of big-money players is usually on Bitcoin (BTC). However, assets like Ether (ETH) and decentralized finance (DeFi) are beginning to pique the attention of major investors.For Siam Commercial Bank (SCB), DeFi is a major focus point of its current digital asset drive, as Thailand’s oldest bank prepares itself for the expected financial technological disruption of decentralized finance. While other banks are still undecided or only making temporary forays into interacting with digital assets, SCB says it is keen on committing funds to explore the blockchain and DeFi space.SCB’s DeFi focus is also coming at a time when regulators in Thailand are targeting the decentralized finance space for more stringent regulations. Indeed, regulatory attention is increasingly coming the way of the niche market space with national and intergovernmental agencies looking to craft legal policies for the DeFi market.DeFi initially held the promise of decentralization; the disintermediation of the established gatekeepers of global finance. However, with banks and financial institutions investing in decentralized technology, the narrative appears to be shifting towards a hybrid form of DeFi known as regulated DeFi, which combines the extant norms and efficiency of traditional finance, instant settlements and cost reduction benefits associated with decentralized protocols.DeFi ambitionsSiam Commercial Bank’s $110 million blockchain war chest started as a $50 million seed fund initiated back in February by SCB 10X, the bank’s venture arm. As reported by Cointelegraph at the time, the fund further strengthened the bank’s forward-thinking approach to the emerging developments in digital finance.In a conversation with Cointelegraph, Mukaya ‘Tai’ Panich, chief venture and investment officer at SCB 10X, said that DeFi was a sort of revelation for the bank during its assessment of the emerging digital finance landscape.“We were doing work on the blockchain industry and started looking into DeFi. And we were amazed by it,” Panich told Cointelegraph. According to the SCB 10X executive, the bank was quick to spot the paradigm shift of potential DeFi technology and the possible disintermediation of the traditional financial institutions.“DeFi projects can be completely automated,” he said, noting that human involvement would be restricted to smart contract code upgrades. Panich also touched on the revolutionary nature of smart contracts and how lines of code can enable direct transactions between entities like lenders and borrowers without the need for a central counterparty.Given the possibility of DeFi upending the legacy finance status quo, Panich says banks would do well to prepare for the imminent disruption:“The reason we want to invest in DeFi and be part of the DeFi protocol’s ecosystem is because we want to understand and capitalize on DeFi, given its potential to meaningfully impact the financial industry.”At $110 million, the blockchain and DeFi fund is almost half of the SCB 10X’s $220 million venture capital fund. Commenting on the size of the allocation to digital assets, Panich said that it was a reflection of the bank’s commitment to the DeFi space, adding:“SCB 10X has invested and developed multiple collaborative relationships with the blockchain community in Asia and across the world including Ripple, BlockFi, Sygnum, Alpha Finance Lab, Anchorage, Anchor Protocol (part of Terra chain), Axelar and Ape Board, among others.”Related: Thai bank’s venture arm invests in institutional crypto custodian AnchorageUpending global financeBack in April, John Whelan, head of Banco Santander’s blockchain lab in Madrid, put forward an argument for regulated DeFi. According to Whelan, private layer-two settlement networks for asset classes running on top of public blockchains will likely emerge in the future.According to Whelan, blockchain adoption for reducing transaction settlement throughput is a major focus point for legacy finance stakeholders. Whelan’s comments highlighted the emerging narrative that rather than disintermediation, financial institutions will find means to adopt DeFi tech to their own backend processes.Panich also echoed similar sentiments, telling Cointelegraph: “I want to point out that I really see a future where traditional financial companies will work together with DeFi companies. My view is that in the future, there will be an integration of traditional finance with DeFi.”According to the SCB 10X chief investment officer, banks and financial institutions have the necessary “customer-facing” experience to better offer innovative fintech services to consumers. “In the future, I can see a world where DeFi can power the back-end of traditional finance companies,” Panich added.For Rachid Ajaja, CEO and co-founder of decentralized capital market outfit AllianceBlock, the promised upending of legacy finance by DeFi is something that will happen in the long term. However, Ajaja said the short-term trend will consist of more financial institutions leveraging aspects of decentralized finance.The AllianceBlock CEO drew parallels with the digital transformation era that saw the emergence of fintech companies providing services via APIs that interface with the banking system. “With the bridging of DeFi and financial institutions, we will see exactly the same thing, and bit by bit, legacy systems will change,” Ajaja told Cointelegraph, adding:“Long term, I am absolutely confident that DeFi will upend the global financial system completely because everything that is done in traditional finance can be replicated in DeFi with lower cost, less need for a middleman, new opportunities and increased new revenue streams. It’s only a matter of time.”Craig Russo, director of innovation at the nonfungible token vault and marketplace protocol PolyientX, also provided further insight as to the possible future path for DeFi adoption in global finance. Russo told Cointelegraph that financial institutions will most likely adopt open-access protocols via initiatives like Compound Treasury while also utilizing DeFi technology within their internal systems.“A big goal of the DeFi movement is to revamp the current economic system to better align incentive structures, which may ultimately come at odds with the interests of some institutions while opening the door to a new wave of fintech innovation,” Russo added.Related: Thailand to target DeFi in latest regulatory clampdownDealing with regulatory pressureAs the SCB continues with its exploration of blockchain investment opportunities, authorities in Thailand are shining the regulatory spotlight on DeFi. Back in June, Thailand’s Securities and Exchange Commission (SEC) announced plans to consider a licensing regime for the decentralized finance protocols, especially projects that issue tokens.Commenting on how the bank will handle the increased scrutiny of the DeFi space, Panich stated, “SCB 10X’s aim is to absolutely work within the regulations laid out by the government and regulators such as the Thai SEC and the Bank of Thailand.”“Blockchain and DeFi are very young, emerging and fast-changing industries. As a TradFi player active in DeFi, it is incumbent upon us to work closely with the government and regulators to help put forward the DeFi industry’s perspective, finding optimal ways to move the industry rapidly forward.”The Thai SEC’s plan to consider DeFi regulations is indicative of the current attention being paid to DeFi by regulators across the globe. Also in June, the World Economic Forumreleased a policy toolkit for fair and efficient DeFi regulations.The emphasis on fair and efficient regulations is likely based on fears that blockchain startups may be at a disadvantage from a compliance standpoint if more stringent measures are applied to DeFi. Regulated entities like banks and financial institutions may find it easier to negotiate these policy constraints.Indeed, AllianceBlock’s Ajaja made this same point to Cointelegraph, stating, “DeFi primitives are definitely at a disadvantage in this regard against their counterparts in mainstream finance.” As such, Ajaja stated that compliance gateways for protocols like Know Your Customer and Anti-Money Laundering are necessary for greater compatibility with mainstream finance and the move towards interfacing with real-world assets for DeFi primitives.

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Just HODL! Bitcoin and Ethereum outperform ‘lower risk’ crypto index funds

In the past two decades, index and exchange-traded funds (ETF) have become some of the most popular forms of investing because they offer investors a passive way to gain exposure to a basket of stocks as opposed to investing in individual stocks which increases risk of loss. Since 2018, this trend has extended to the crypto sector and products like the Bitwise 10 Large Cap Crypto Index (BITX) tracks the total return of Bitcoin (BTC), Ether (ETH), Cardano (ADA), Bitcoin Cash (BCH), Litecoin (LTC), Solana (SOL), Chainlink (LINK), Polygon (MATIC), Stellar (XLM) and Uniswap (UNI). The ability to access multiple top projects through one weighted average market cap index sounds like a great way to spread out risk and gain exposure to a wider range of assets, but do these products offer investors a better return in terms of profit and protection against volatility when compared to the top-ranking cryptocurrencies? Hodling versus crypto basketsDelphi Digital took a closer look at the performance of the Bitwise 10 and compared it to the performance of Bitcoin following the December 2018 market bottom. The results show that investing in BTC was a more profitable strategy even though BITX was slightly less volatile. Bitcoin price vs. Bitwise 10. Source: Delphi DigitalAccording to the report, “indices aren’t meant to outperform individual assets, they’re meant to be lower-risk portfolios compared to holding an individual asset,” so it’s not surprising to see BTC outperform BITX on a purely cost basis. The index did offer less downside risk to investors as the market sold-off in May but the difference was “trivial” as “BTC’s max drawdown was 53% and Bitwise’s was 50%.” Overall, the benefits of investing in an index versus Bitcoin are not that great because the volatile nature of the crypto market and frequent large drawdowns often have a larger effect on altcoins. Delphi Digital said:“Crypto indices continue to be a work-in-progress. Choosing assets, allocations, and re-balancing thresholds is a difficult task for an emerging asset class like crypto. But as the industry matures, we expect more efficient indices to pop up and gain traction.”Ethereum also outperforms DeFi basketsDecentralized finance (DeFi) has been one of the hottest crypto sectors in 2021 led by decentralized exchanges like Uniswap (UNI) and SushiSwap (SUSHI) and lending platforms like AAVE and Compound (COMP). The DeFi Pulse Index (DPI) aims to tap into this rapid growth and the DPI token has allocations to 14 of the top DeFi tokens, including UNI, SUSHI, AAVE, COMP, Maker (MKR), Synthetic (SNX) and Yearn.finance (YFI). When comparing the performance of DPI to Ether since the inception of the index, Ether significantly outperformed in terms of profitability and volatility, as evidenced by a 57% drawdown on Ether versus 65% for DPI. Ether price vs. DeFi Pulse Index price. Source: Delphi DigitalWhile this is an “imperfect comparison” according to Delphi Digital due to the fact that “the risk and volatility of DeFi tokens are higher than Ether’s,” it still highlights the point that the traditional benefits seen from indices are not mirrored by crypto-based baskets.Delphi Digital said:“You could’ve just HODL-ed ETH for a superior risk-return profile.”For the time being, Bitcoin and Ether have proven to be two of the lower-risk cryptocurrency plays available when compared to crypto index funds that offer exposure to a larger number of assets.The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

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Altcoin roundup: Crypto credit cards could be the missing link to mass adoption

Out of the many routes available to the mass adoption of cryptocurrencies, which includes decentralized finance (DeFi), layer-one protocols, nonfungible tokens and stablecoins, perhaps the simplest and most applicable path for the public at large is the ability to utilize cryptocurrency for everyday purchases with an integrated debit or credit card.2021 has seen a growing number of companies offer cryptocurrency-based credit cards that give holders the chance to tap into the value of their cryptocurrencies for daily purchases, but is this just the latest gimmick being used by businesses to earn a buck or a real sign of mass adoption?While the traditional financial sector isn’t discussed much in this newsletter because its focus is on exploring the various sub-sectors of the cryptocurrency ecosystem, crypto assets are quickly becoming a new investment class recognized by the global financial system.Debit cards tap into crypto holdingsIt’s important to clarify the differences between the card services offered by some of the largest players in the game including Crypto.com, BlockFi and Coinbase. Debit cards like the one offered by Crypto.com allow users to convert their cryptocurrency holdings to a stablecoin that can then be transacted on Visa’s global network. You can now top up your card with $ADA, $DOGE, $LINK, $MATIC, $UNI, along with 12 other new supported stablecoins and tokens! Available in the US, Europe, UK, Canada, Singapore and APAC. Details https://t.co/ChXzOjfxlB pic.twitter.com/qTVsXfy4KZ— Crypto.com (@cryptocom) July 20, 2021The Coinbase card and crypto debit card offered by Uphold provide a similar service, with both offering rewards for use in the form of a percentage of each purchase, paid back in Bitcoin (BTC) or another cryptocurrency, depending on the platform. Being able to make purchases with your holdings may help bring a good use case to the cryptocurrency ecosystem, but it also goes against the “hodl” nature of many investors who subscribe to Gresham’s Law that “bad money drives out good money in circulation.” When it comes to which money is spent and which money is saved, good money, or cryptocurrencies, in this case, will be saved while fiat currencies will be spent in daily transactions. Crypto credit allows hodlers to continue accumulatingCredit cards like the recently launched BlockFi Rewards Visa Signature Credit Card do not require an upfront conversion of a user’s crypto holdings to pay for transactions. Instead, it offers a credit limit with an attached interest rate. Gemini exchange plans to offer a BTC cashback rewards card on the Mastercard network. This is another example that has taken the approach of the legacy credit system by offering rewards and charging interest on carried balances. Users can spend fiat currencies and earn cashback rewards that are paid back in the form of Bitcoin.Paying in dollars while stacking stats lines up more with the idea of spending bad money in daily transactions while earning more crypto, but it does require users to have fiat currencies to spend. In the case where someone only has cryptocurrencies, they would be forced to convert some of their holdings to the accepted form of repayment and possibly incur a taxable event, depending on the laws where they live.Currently, most of the world’s population either still uses the traditional financial system or is part of the large population of the unbanked who are outside of all systems. The injection of blockchain technology and cryptocurrency is either adding another step to the process or offering a new way into a financial network. For die-hard crypto fans that hold as much of their wealth as possible in cryptocurrency, debit card options that allow users to spend their holdings may provide the best option.Traditional financial system vs decentralized financial system. #defi #blockchain #cryptoCredits: Financial times pic.twitter.com/1dc0jJxvm3— BlockchainAssets (@BAXASSETS) December 30, 2019

Since many crypto investors work jobs that still pay in fiat currencies, credit card options offer a way to use their income to make purchases while also continuing to accumulate without having to conduct the conversion to crypto themselves. Related: Bitcoin payments for real estate gain traction as crypto holders seek monetizationLegacy networks will eventually integrate blockchain technologyVisa and Mastercard have fully embraced the integration of cryptocurrencies and blockchain technology into their networks. Visa recently reported that its crypto-enabled cards holders spent more than $1 billion during the first half of 2021.It’s possible that in the near future, the entire network could be blockchain-based and users will be interacting with digital currencies on a regular basis without even knowing it.How it all plays out long-term is anyone’s guess, but the current trend of companies releasing cryptocurrency-related debit and credit cards shows no signs of slowing down. They are a tried-and-true marketing tactic used in industries large and small to help entice new users. Want more information about trading and investing in crypto markets?The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

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