Blockchain and Cryptocurrency News Roundup

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  • September 21, 2020
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21 September 2020.

Dive into a short summary of some of the biggest headlines in Crypto last week. Uniswap’s UNI becomes a top10 DeFi token after a day, driving Ethereum transaction fees to an all-time high, Kraken is launching a crypto bank in Wyoming, paving the way for possible stock offerings, Bitcoin falls back below $11K as markets doubt Fed’s ability to boost inflation & Bitcoin’s average transaction value returns to 2017 levels.

Uniswap’s UNI becomes a top 10 DeFi token after a day, driving Ethereum transaction fees to an all-time high

Uniswap recently launched its own governance token UNI, and since its launch, Ethereum’s transaction fees have reached new highs. Within hours after the launch of the UNI token, Uniswap became one of the most valuable projects in the DeFi sector.

As users were in a rush to claim Uniswap tokens allocated to them, the Ethereum network faced massive congestion. This resulted in a spike in transaction fees on the Ethereum network, reaching a record high. Uniswap accounted for 35% of the total gas consumption in the past 24 hours, where gas prices were recorded as high as 700 gwei. Average gas prices are around 416 gwei, and according to Etherscan, 422 gwei is already considered high. 

According to data from crypto analytics firm Glassnode, the total amount of miner fees recorded spike from $100,000 to $900,000 in less than an hour. With Ethereum’s fees shooting up, Ryan Watkins, research analyst at Messari said, “Ethereum is damn near unusable right now. I can only imagine what retail will think if they eventually come into this market and face $50+ gas fees and 10+ minutes transaction confirmations.” He added: “This has been my biggest anxiety about this bull market. The protocols are ready, the infrastructure is not.”

Watkins believes that with Ethereum’s high transaction fees, it could be detrimental to the growth of the DeFi and crypto space in the long run. Ethereum’s high transaction fees may hinder the bull market, as the majority of retail users may get edged out of the market, leaving the whales to dominate.

Kraken is launching a crypto bank in Wyoming, paving the way for possible stock offerings

Cryptocurrency exchange Kraken is launching a bank under a new regulatory framework in Wyoming, a move that will expand its product suite, the firm said in an announcement Wednesday. Headquartered in Wyoming, Kraken Financial will be regulated by the Wyoming Division of Banking under a so-called Special Purpose Depository Institution. The new structure was purpose-built for cryptocurrency companies and will allow Kraken to offer certain banking functions to clients and effectively serve as the exchange operator’s primary banking relationship. Up until this point, Kraken has relied on third-party providers for wire transfers and other services that enable it to engage with the broader financial system. Crypto firms have a history of challenging and precarious banking relationships. Most traditional banks have refused to offer services to such firms, while some offshore exchanges like Bitfinex have had trouble maintaining relationships with banking partners. To be sure, there are some small community banks aimed at the crypto market—such as Signature and Silvergate—but they have had issues with outbound wire transfers in the past. Still, big banks are moving into the market with JPMorgan recently taking on exchanges Coinbase and Gemini as banking clients. 

“For Kraken, this represents a better banking infrastructure,” Dave Kinitsky, CEO of Kraken Financial, said in a phone interview with The Block. “This will require less reliance on third-party providers and offers more certainty from a regulatory perspective and will allow us to launch new products for new customer segments.”


Bitcoin falls back below $11K as markets doubt Fed’s ability to boost inflation

Prevailing doubts over whether the Federal Reserve has what it takes to hit its 2% inflation target hit traditional markets and may have contributed to a bitcoin price drop early on Thursday. CoinDesk data shows bitcoin’s price fell to just under $10,900 in the Asian trading hours – not long after it had climbed to near $11,100. The drop is bitcoin’s latest failure around the key psychological hurdle and could be the result of prevailing doubts over the Fed’s ability to hit the 2% inflation target. At the Federal Open Market Committee (FOMC) meeting Wednesday, Fed Chair Jay Powell said the U.S. central bank would keep interest rates at zero until 2023, when the Fed expects to hit its 2% inflation target. It follows Powell’s announcement last month that the Fed would tolerate inflation above the 2% target to compensate for the drop in consumer prices earlier in the year. The prospect of high inflation is generally considered good for bitcoin and the price instantly ticked up above the $11,000 mark following the FOMC announcement. But some market observers are now concerned whether the Fed has what it takes to reach 2% inflation. Speaking to the Financial Times, John O’Connell, a portfolio manager at Garda Capital, said the Fed hadn’t been able to create inflation consistently for a very long time and still had much to prove. Indeed, the Fed announcement was met with general uneasiness across the market. The S&P 500 slumped 0.46% and the Nasdaq fell a further 1%, while both bond yields and the U.S. dollar strengthened slightly. Similarly, an announcement from the Bank of Japan to keep rates unchanged this morning led to the Nikkei dropping 0.67% in the Asia trading day. The Bank of England has also just announced it will keep rates unchanged at 0.1%.

While there’s a case for bitcoin benefiting in a deflationary environment, it nonetheless goes against the prevailing narrative that the original cryptocurrency’s fixed supply makes it an ideal hedge against the deleterious effects of a runaway money supply.


Bitcoin’s average transaction value returns to 2017 levels

As the bull run continues, the average value of a Bitcoin transaction is at its highest level in over a year, and active addresses have sustained levels close to all-time highs. The average value of Bitcoin sent in a single transaction has reached its highest level in more than a year, hitting a peak of more than $129,000 on September 17 according to blockchain data provider BitInfoCharts. The last time Bitcoin’s average transaction value rose above $121,000 was in August 2019, when one or a few massive transactions pushed the total to more than $812,000 on average. And that was an anomaly; the average cost of a Bitcoin transaction hasn’t been this high since late 2017, when Bitcoin’s price hit its all-time high price of just below $20,000. The latest rise is a sign of sustained, heightened activity on the Bitcoin blockchain. Coinciding with this, other crypto networks are seeing their own record-breaking activity. The number of Bitcoin active addresses, i.e. the number of unique addresses sending and receiving transactions each day, are also at their highest level since late 2017. Active addresses have averaged around 850,000 transactions per day since the last week of August. In late 2017, when Bitcoin hit its all-time high price, daily active Bitcoin addresses averaged close to 1 million. Ethereum-based DeFi applications, decentralized versions of financial services like loan providers and interest-bearing products backed by crypto, have attracted much of the attention within the crypto ecosystem in 2020, but Bitcoin hasn’t been left behind. Bitcoin futures trading has reached record levels on some exchanges, and the number of Bitcoin ATMs installed around the globe recently crossed the 10,000 mark. DeFi may be stealing the show, but Bitcoin network stats reveal that the original crypto asset isn’t likely to be left behind.


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