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Binance Enjoys $300M Inflow from Huobi Following Exchange Crackdowns

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According to a report, close to $300 million equivalent to 18,652 BTC has been moved from Huobi to Binance from the time the Chief Operating Officer of Huobi Robin Zhu disappeared on November 2, 2020, to November 11, 2020. 

Binance has become the next destination of the huge migration of users from the Huobi exchange and other China-based cryptocurrency exchanges following the recent severe crackdowns staged by the Chinese government. According to a report, there has been a record amount of $300 million inflow from Huobi to Binance as Chinese traders and investors look for alternatives.

The crackdowns on exchanges in China have been around for some time with the recent operation being linked to the Central Bank Digital Currency yet to be launched. However, others suspect that the use of cryptocurrencies for fraud and money laundering is the primary reason for this operation. 

According to a report, close to $300 million equivalent to 18,652 BTC has been moved from Huobi Exchange to Binance Exchange from the time the Chief Operating Officer of Huobi Exchange, Robin Zhu disappeared on November 2, 2020, to November 11, 2020. 

TokenBetter on the other hand also suspended all withdrawals in mid-October with the founder said to be under investigation. OKEx, another exchange with deep ties in China has also been said to be under investigation causing withdrawal to be unavailable. This has severely affected their native tokens as well with that of OKEx Exchange (OKB) losing close to 30% of its price while the native currency of Huobi Exchange (HT) struggles to add gains. 

The Spokesperson of the Binance Exchange refused to comment on the effect of the ongoing crackdowns on their exchange. However, a man Identified as Colin Wu, who happens to be a Cryptocurrency Reporter suggested that the migration of Chinese users from Huobi to Binance is because the Chinese are already familiar with Binance and also, Binance executives are based abroad. 

An attempt to uncover the whereabouts of Robin Zhu was infertile as the company refused to give out information, but a brief conversation with Ciara Sun, the Huobi Exchange’s Global Market’s Vice President stated that all operations are normal. She said the information going around is false, and they reserve the right to take people on for spreading false news. 

Reason and Effect of This Crackdown on Huobi Exchange and Others

Felix Wang, managing director at Hedgeye revealed to reporters that the Chinese government is only interested in cracking down on products that are misleading to the public. He said that the government, who has been a big fan of innovation and development, does not want digital products to disrupt what is already circulating in the financial system. 

Wang analyzed the long term effect of these persistent crackdowns on the cryptocurrency sector stating that this movement will strongly affect investors abroad who seek to do business related to cryptocurrency in China. He also pointed out that fintech and blockchain-related companies may feel this is the beginning of crackdowns on them forcing companies to seek expansion overseas. Due to the fact that Chinese based cryptocurrency traders may struggle to find a platform that is regulatory compliance, they may troop into the foreign-based exchanges. 

Changpeng Zhao, the CEO of Binance Exchange has revealed that his company’s locations are decentralized, unlike OKEx that is currently based in Malta, and Huobi Exchange now based in Seychelles.

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Excellent John K. Kumi is a cryptocurrency and fintech enthusiast, operations manager of a fintech platform, writer, researcher, and a huge fan of creative writing. With an Economics background, he finds much interest in the invisible factors that causes price change in anything measured with valuation. He has been in the crypto/blockchain space in the last five (5) years. He mostly watches football highlights and movies in his free time.



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Market Wrap: Bitcoin Pushes Past $19.4K; Deribit Ether Options Volume Spikes

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How high can bitcoin’s price go? Analysts say the higher the price, the more investors will plow in. Meanwhile, increasing ether options volume on Deribit is likely making derivatives more expensive.

  • Bitcoin (BTC) trading around $18,987 as of 21:00 UTC (4 p.m. ET). Gaining 3.2% over the previous 24 hours.
  • Bitcoin’s 24-hour range: $18,059-$19,392
  • BTC below its 10-day moving average but above 50-day, a sideways signal for market technicians.

Bitcoin trading on Bitstamp since Nov. 22.
Source: TradingView

Bitcoin’s price broke above $19,000 Tuesday, hitting as high as $19,392, according to CoinDesk 20 data. Its price lost some steam after but rebounded to $18,987 as of press time. 

Read More: Bitcoin Breaks $19K, New All-Time High Seems Imminent

“We could test an all-time high today,” said Rupert Douglas, head of institutional sales for crypto broker Koine. “We have had such a strong run-up that I’d be looking to take profits.”

Bitcoin’s record price high was $19,738 back on Dec. 18, 2017, according to CoinDesk 20 historical bitcoin data. 

“Bitcoin is fast approaching all-time highs, with final resistance from 2017 within reach,” noted Katie Stockton, a technical analyst for Fairlead Strategies. “There are some signs of exhaustion, but they are not actionable unless a loss of momentum develops.”

At over $1.6 billion as of press time, momentum in the form of USD/BTC volumes on five combined major exchanges is set for another banner day. Tuesday is shaping up to be the second highest in the past month as billion-dollar volume days for the five exchanges are becoming more common.

volumesnov24

Spot USD/BTC volumes on major exchanges the past month.
Source: Source: Shuai Hao/CoinDesk Research

Global equities are also having a bullish day, with indexes flashing green in a major way:

Since starting the year uncorrelated with the S&P 500 – which is denoted as “0” in the chart below – bitcoin’s performance has more closely matched stocks after March’s crash when assets dropped amid COVID-19 concerns. The correlation coefficient of the two on a 90-day basis is now around 0.3.

btcspxcorrelation2020

Bitcoin’s 90-day correlation with the S&P 500 in 2020.
Source: Shuai Hao/CoinDesk Research

An optimistic economic environment has given both stocks and bitcoin “risk-on” properties as investment assets.

“Bitcoin has now shifted to a risk-on trade along with equities markets,” noted Jason Lau, chief operating officer of San Francisco-based cryptocurrency exchange OKCoin. 

cdbpioneyear

Bitcoin’s price performance the past year.
Source: CoinDesk 20 Bitcoin Price Index

Analysts expect $20,000 per 1 BTC to arrive soon, which could produce some profit-induced selling but also more bullish buying, according to Rich Rosenblum, head of trading at crypto firm GSR. 

“Hitting $20,000 will likely bring some profit-taking,” noted Rosenblum. “Yet, reaching a new all-time high will also bring validation for bitcoin, which may spur more buying once we are firmly above $20,000. Once we reach a new high, every bitcoin investor will be in the money.”

ETH options heating up

Ether (ETH), the second-largest cryptocurrency by market capitalization, was up Tuesday, trading around $604 and climbing 1.6% in 24 hours as of 21:00 UTC (4:00 p.m. ET).

Read More: Ethereum 2.0’s Genesis Day Is Officially Set for Dec. 1

With 198,247 total contracts traded, Monday was the second-biggest day in 2020 for Deribit ether options contracts, according to data aggregator Genesis Volatility. The top day was Sept. 1, when total contracts reached 201,815.

histethoptionsvolume

ETH options volume on Deribit since Jan. 1, 2020.
Source: Genesis Volatility

Greg Magadini, chief executive officer of data aggregator Genesis Volatility, says all this action on Deribit, the largest derivatives venue in the crypto ecosystem, means the costs associated with ether options have risen.

“With this rally we are seeing a ton of option buying happening,” Magadini noted. “This is pushing up implied volatility a lot. The overall price of options adjusted for various parameters such as expiration, strike, etc., has increased.”

Other markets

Digital assets on the CoinDesk 20 are all green Tuesday. Notable winners as of 21:00 UTC (4:00 p.m. ET):

Read More: XRP Price Surges to 2-Year High as Airdrop Frenzy Builds

  • Oil was up 4.6%. Price per barrel of West Texas Intermediate crude: $44.84.
  • Gold was in the red 1.6% and at $1,807 as of press time.
  • The 10-year U.S. Treasury bond yield climbed Tuesday jumping to 0.880 and in the green 2.2%.
coindesk20november



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AvePoint to Go Public via $2 Billion Merger with Apex Technology

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AvePoint’s business has gained from a spike in adoption of Microsoft Cloud with more users moving to work virtually during the COVID-19 pandemic.

AvePoint Inc, a cloud data management firm that is backed by Sixth Street investment firm, is scheduled to go public. The move by AvePoint will involve a merger with blank-check firm Apex Technology Acquisition Corporation in a deal that is estimated to be worth $2 billion.

On the back of that announcement, Apex shares gained over 2% on November 23. AvePoint is recognized as the biggest data management solutions provider for the Microsoft cloud. When the deal goes through, the company is set to receive $140 million in proceeds from several institutional investors. It will then get listed on the Nasdaq using the ticker symbol “AVPT”.

Currently, AvePoint has almost seven million users and it operates from its headquarter in Jersey City, New Jersey. Official reports confirm that the company anticipates generating around $148 million in revenue this year, representing a 26% surge from one year ago.

Interestingly, AvePoint’s business has gained from a spike in adoption of Microsoft Cloud with more users moving to work virtually during the COVID-19 pandemic. The firm targets more small and medium-sized business companies to offer vertical solutions for enterprise content management on the cloud.

The co-CEO of Apex who is a former Oracle finance boss, Jeff Epstein, said that the Microsoft Cloud has created a tidal wave that is sweeping through the enterprise world.

Brad Koenig, an ex-Goldman Sachs head of technology investment banking, teamed up with Epstein to launch Blank-check firm Apex. It raised around $305 million in September 2019.

How This AvePoint and Apex Merger Works

By description, a special purpose acquisition company (SPAC) is a type of shell firm that uses initial public offering (IPO) proceeds to acquire another firm. The process takes at most two years to complete, which then takes the acquired company public. The investors do not know beforehand which company the SPAC plans to buy.

SPACs are becoming a popular IPO alternative for firms in 2020. The founder and CEO of AvePoint, Tianyi Jiang, mentioned that the firm had thought about a traditional IPO. However, he is convinced that the operational expertise from Apex may enable his 19-year-old firm to scale and expand faster into new market bases.

Koenig will join the AvePoint board as an observer while Epstein comes in as a director. Sixth Street spearheaded a $200 million growth equity AvePoint investment in 2019. It will continue as a shareholder in the combined firm. On their part, Goldman Sachs and Evercore Group will continue acting as AvePoint’s financial advisers. On the other hand, William Blair & Co is the current financial adviser to Apex.

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Wanguba Muriuki is a content crafter passionate about putting everything into writing. He is passionate about Blockchain and Traveling. He is also an experienced creative and technical writer. Everything and everyone has a story to tell. What better way to capture the real story than in words.



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Coinbase Will Suspend All Margin Trading Tomorrow

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Crypto exchange Coinbase plans to end all margin trading effective Nov. 25, 2020, due to recent regulations by the Commodity Futures Trading Commission (CFTC).

The San Francisco-based trading platform announced Tuesday that it would prevent customers from placing new margin trades beginning at 2 p.m. PT (22:00 UTC) on Wednesday, while simultaneously canceling any open limit orders. 

Coinbase will end the margin trading feature entirely next month, once existing positions expire. When customers trade on margin, they’re effectively borrowing funds from the exchange or broker to cover the cost of an investment in an asset such as a security or a cryptocurrency. This allows traders to leverage their positions, thus amplifying profits – or losses.   

The exchange pointed to “recent guidance” from the CFTC, referring to the Commission’s March guidance around “actual delivery” of digital assets as the reason for this decision, but didn’t specify which aspect of the guidance led to the move.

That guidance, which has its roots in a 2016 enforcement action against Bitfinex, sought to provide rules around when a customer can be said to have legally taken control of a cryptocurrency, including when the customer acquires the crypto through a margin or leveraged product.

Assets purchased through leverage or a margin contract cannot be liquidated, according to the guidance.

‘Actual delivery’

Coinbase appears to be saying that it is difficult, if not impossible, for it to comply with a CFTC requirement that neither it nor any affiliated entity can have any sort of control over a cryptocurrency once it’s been delivered in accordance with the terms of a margin contract.

Under the terms of the CFTC’s guidance, “actual delivery” has occurred when a customer controls the cryptocurrency purchased, including if it was acquired via a margin or leveraged product, and the seller has no control over the cryptocurrency in question.

Coinbase has taken issue with this point in the past. In a comment letter to the CFTC discussing the then-proposed guidance, it wrote that affiliates of the seller should be able to hold the cryptocurrencies. 

“Requiring unfettered ability to transfer digital assets would effectively mean that U.S. entities and regulated entities, or entities using cold storage or other asset protection methods, could not hold digital assets acquired through margined transactions,” then-Chief Legal and Risk Officer Mike Lempres wrote in 2018. 

The final guidance approved in 2020 said that the offeror, seller or affiliated entities cannot have any interest, legal right or control over the commodity.

Essentially, Coinbase would have to register with the CFTC as a commodities exchange if it wants to continue offering leveraged products.

Other exchanges in the U.S., like Kraken, also offer margin trading. A spokesperson did not immediately respond to a request for comment on whether Kraken was also looking at the actual delivery guidance.

“We believe clear, common-sense regulations for margin lending products are needed to protect and provide peace of mind to U.S. customers,” Coinbase’s blog post said. “We look forward to working closely with regulators to achieve this goal.”

UPDATE (Nov. 24, 2020, 22:50 UTC): This article has been updated with additional information.



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