Crypto SWOT: bank of America announced approval for trading of bitcoin futures

Strengths

  • Of the cryptocurrencies tracked by CoinMarketCap, the best performer for the week was Axie Infinity, rising 49.67%.
  • The European Central Bank (ECB) reported that it will start the investigation phase of a Eurozone central bank digital currency (CBDC), which can last up to 24 months. ECB’s President, Christine Lagarde, said in March that a CBDC could be launched within four years; the ECB started discussing the potential of a CBDC for the 19 Eurozone countries in January of this year.
  • The People’s Bank of China (PBOC) reported that the total value of transactions using the country’s central bank digital currency (CBDC) reached $5 billion by the end of June, adding that to the total number of transactions at 70.75 million, across 21 million personal wallets and 3.5 million enterprise wallets. The digital yuan, China’s CBDC, will be compatible with smart contracts and has been under trial for over a year. PBOC did not give a timetable for the CBDC’s launch, but its progress will surely push other nations to experiment with their own CBDC’s.

Weaknesses

  • Of the cryptocurrencies tracked by CoinMarketCap, the worst performer for the week was Telcoin, down 33.46%.
  • The U.S. Securities and Exchange Commission (SEC) postponed its decision on WisdomTree’s Bitcoin ETF application. The SEC is seeking feedback from the public and industry experts on the application to determine whether the Bitcoin ETF would be a safe investment product. Currently, the SEC is reviewing over a dozen active Bitcoin ETF applications, and even delayed its decision on VacEck’s application. The U.S. regulator has raised concerns around crypto market manipulation and investor protection.
  • Binance, the largest cryptocurrency exchange in the world, is set to stop support and service for tokens linked to stocks. The service, which began three months ago, has received scrutiny from regulatory bodies around the world. With the stock tokens, Binance allowed its customers to buy fractions of shares in companies like Tesla, Coinbase, Microstrategy, Microsoft and Apple. Support for these tokens will end on October 14, 2021. Binance has been issued warnings against operating in the U.K., Japan, and Hong Kong. Furthermore, Bitcoin’s gains for the year are now comparable to that of the S&P 500 and the chart below shows the largest cryptocurrency’s performance this year, which peaked in April and has slid ever since.

Opportunities

  • Hashdex Ltd., a Brazilian digital asset management firm, is set to launch a Bitcoin exchange traded fund (ETF) which will use a portion of its management fee to buy carbon credits to offset the carbon produced by the Bitcoin held in the fund. The Hashdex Nasdaq Bitcoin Reference Price Index Fund (BITH11) will list on the Brazilian stock exchange B3 on August 4, 2021. Hashdex will partner with the Crypto Carbon Ratings Institute (CCRI) to generate annual reports with estimates of energy consumption and carbon emissions related to the mining process of all Bitcoins acquired by BITH11.
  • Bank of America announced that it has approved trading of Bitcoin futures for certain clients. Due to increased demand, the second-largest bank in the U.S. will trade the Chicago Mercantile Exchange (CME) Bitcoin futures on behalf of clients. This news comes a few weeks after it emerged that Bank of America had created a team dedicated toward researching cryptocurrencies and related technologies. CME is the leading Bitcoin futures trading platform, with a total open interest at $11.3 billion, which is down from its April 13 peak of $27.3 billion.
  • Square Inc.’s CEO Jack Dorsey said that the company is opening a new business to focus on creating an open developer platform to provide non-custodial, decentralized financial services, adding that the unnamed division’s primary focus will be Bitcoin. Square already has Square Crypto, a division working on the Lightning Development Kit to allow for quicker and easier payments.

Threats

  • State governments in provinces of Anhui, Henan, and Gansu ordered a halt of cryptocurrency mining operations. This is the latest in a series of similar orders implemented in other provinces of China amidst a nationwide crackdown on the industry. The government has increased its efforts to curb crypto mining operations due to environmental and financial concerns.
  • India’s ICICI Bank, one of the country’s largest private lenders, reported that its customers that intend to transfer money under the Reserve Bank of India’s (RBI) remittance scheme will need to sign a declaration stating that proceeds will not be used for trading cryptocurrencies and that the proceeds are not from redemption of cryptocurrency investments. The regulatory environment for cryptocurrencies in India remains uncertain as several private banks have decided against offering services to cryptocurrency-related businesses.
  • ApeRocket, which is a decentralized finance (DeFi) protocol built on the Binance Smart Chain, suffered two flash loan attacks, costing users around $1.26 million. This is one of several flash loans attacks that have occurred in the DeFi space within this year, and Binance Smart Chain has been at the center of many of those hacks. Such DeFi yield farming protocols allow individuals to earn interest or rewards on their crypto deposits, but this nascent space has suffered hacks which deter increased participation.




Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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