Cointelegraph By Christopher Attard
Earlier this week, Elon Musk made history when he placed his full support behind Bitcoin (BTC) during a Clubhouse stream. When discussing Bitcoin and the GameStop debacle with Robinhood CEO Vlad Tenev, Musk said: “I am late to the party, but I am a supporter of Bitcoin.” This came a few days after Musk changed his Twitter profile, adding “Bitcoin” to his bio.
Interestingly enough, Musk’s public endorsement of Bitcoin comes at a time when legacy financial markets have been openly caught defrauding their own customers, and the Robinhood app is at the center of this fraud. Indeed, the richest man alive told the world that he believes Bitcoin is on the verge of mass adoption amid a backdrop of criminal stock market behavior.
The GameStop saga
For those unfamiliar with these events, the GameStop saga is a “David and Goliath” story that started out with a community of online traders on the subreddit r/Wallstreetbets bringing down hedge funds — clawing away at billions of dollars in institutional short orders. A short order is a type of order that allows investors to profit from the demise of a company.
After retail investors realized that hedge funds shorted GameStop for 150% of its entire public stock — i.e., more shares than existed — a group of 2 million (now 8 million) Redditors figured out that by buying the stock and not selling, hedge funds that shorted GameStop would lose billions. And thus it was. By Jan 29, the loss tallied $19.75 billion as word spread through the power of the internet.
However, as soon as retail investors began winning, the long-reaching tentacles of centralized corporations were able to stop the game entirely, freezing trading on key exchanges and trading infrastructure so that hedge funds could reposition without losing everything.
Decentralization and the “American dream”
Indeed, one of the largest fictions of our time is the story of free markets. This concept embodies the “American dream,” whereby anyone who chooses to follow their dreams can do so (at considerable personal risk). This includes the ability to be rewarded (or punished) for having a stake in the financial game, which should operate under strict rules.
Whether it’s high-frequency trading, synthetic derivatives, infinite money-printing or some combination of all three, the stock market rewards a handful of insiders who game the system and play by a different set of rules than everyone else.
It’s important to realize that the issue is not the game itself — free markets are the most efficient way of proper value transfer, if done correctly. The issue is that rules only apply if institutional players win, otherwise they can be broken, suspended and revised with minimal consequences for those with friends in high places.
This drove many Redditors to the point where, knowing that the market is rigged, they did not care about losing money, provided hedge funds lose billions. It started out as retribution against those responsible for the 2008 financial crisis and the misery that many had to endure because of it.
This Reddit post paints a good picture of the motivations that inspired millions of people to band together against crooked financial conglomerates. Of course, other motivations — such as profit motives — were undoubtedly at play as the market fed on its own self-reinforcing mechanisms. Regardless, the system’s true colors are now out there for all to see.
And while legacy financial media has attempted to steer the narrative in a certain direction, the truth of the matter is that this story is apolitical and exposes the fact that ordinary everyday people are not allowed to win. Irrespective of intentions, the stock market is shown to be a means to entrench and exacerbate poverty in a rigged game that only benefits those who are already wealthy.
The start of a journey
However, the journey doesn’t end here — for there is a parallel system that is not controlled by Wall Street or central bankers, and it’s growing as we speak. With a market capitalization of over $1 trillion, cryptocurrencies are fast becoming the new frontier for financial markets that have no allegiances.
On top of being a new technology that democratizes markets, there is now a crystal-clear reason for investors to opt out of the old system and enter the new one.
Bitcoin started this revolution 11 years ago, and it does not stop there. An entirely new financial ecosystem is being built on Ethereum from the ground up, which has sprung a wealth of decentralized finance products with various trade-offs and use cases.
This time last year, capital in DeFi products reached the $1 billion landmark. Today, that figure is approaching $30 billion, according to DeFi Pulse.
With this backdrop, the future of financial markets seems closer than ever before.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
Christopher Attard is a journalist turned cryptocurrency writer and analyst. Having worked in both the blockchain events sector and traditional finance over the years, he now covers Bitcoin extensively in a semiweekly newsletter. Christopher also works with various small and medium-sized enterprises in the space as a writer and content strategy consultant.
Price analysis 2/26: BTC, ETH, ADA, BNB, DOT, XRP, LTC, LINK, BCH, XLM
One of Switzerland’s leading banks now offers crypto trading
Cointelegraph By Brian Quarmby
Bordier & Cie, a Swiss financial institution operating for more than 170 years, has announced a partnership with digital asset bank Sygnum to allow its customers to purchase crypto assets.
The integration with Sygnum’s business-to-business banking platform allows Bordier’s clients to purchase Bitcoin (BTC), Ether (ETH), Bitcoin Cash (BCH), and Tezos (XTZ).
The announcement describes the move as “lay[ing] the foundation for a broader offering of regulated digital asset products and services,” including options and tokenized asset classes. Bordier managing partner Evrard Bordier said:
“By partnering with Sygnum Bank, we are providing our clients with a one-stop, integrated solution while empowering them to invest in this new, high growth asset class with complete trust.”
Bordier noted the move was driven by increasing demand from clients looking to diversify their portfolios with new assets. The firm emphasized the lack of correlation between the cryptocurrency and mainstream financial markets, describing crypto assets as a “powerful tool to enhance diversification and achieve superior risk-adjusted returns.”
Bordier & Cie is a Geneva-based private banker founded in 1884, that has been owned and managed by the Bordier family for five generations. The bank’s introduction to crypto follows that of many other large institutions looking to adopt cryptocurrency in 2021.
Ethereum exodus continues as Binance ‘helps,’ Feb 17–24.
Cointelegraph By Andrey Shevchenko
The parabolic rise of the Binance Smart Chain has been all over the news this week, aided by a few seemingly unfriendly moves by the exchange itself.
It started on Friday, when Binance suddenly froze withdrawals of Ethereum-based assets for about one hour. Many interpreted it as a move against the blockchain and its ecosystem, given that the cited reason was “congestion issues” — something one hardly imagines is a problem for an exchange, unless they shoulder withdrawal costs for the user.
The day after, FTX started shaming Binance for excessive promotion of BSC on the exchange. Specifically, FTX was apparently “spending millions” in failed deposits that came over the Smart Chain but were meant for Ethereum. FTX’s accusation toward Binance, one of its investors, is that the exchange put BSC as the default option for withdrawing many ERC-20 assets, which caused a lot of failed deposits to FTX.
I can’t say I’ve ever noticed Binance Smart Chain being “the default option” for withdrawals. BSC is the first listed when you attempt to withdraw something like USDC, though it does not actually select the blockchain for you. Still, I can see how some newbies could get swindled by this. People overestimate the degree to which terms like “ERC-20” are known in the casual crypto community. Testing the withdrawal now, Binance forces you to go through a quiz where you confirm you know what you’re doing by selecting BSC. I have no idea when this was introduced, but it’s not impossible that it’s a response to FTX’s statements.
Overall though, there’s nothing inherently wrong with one company using its products to promote another of its products. From the official responses it seems that the Ethereum congestion incident won’t happen again because they “upgraded the systems.”
Cheap tricks would never be able to undermine Ethereum without there being an underlying fundamental weakness. And I think we’ve all had enough with Ethereum gas fees. I tried a non-Ethereum DeFi product recently, and it felt so good to pay just a few cents for a complete interaction.
Binance Smart Chain is already processing more transactions than Ethereum and has over 5 million unique wallets. Ethereum, with its much longer history, is currently sitting at 140 million wallets in total.
Ironically, Ethereum fans should secretly want the bull market to end right now. The longer it goes on, the more gas fees will remain high, and the more people will want to migrate away and seed other environments.
Second largest liquidation day in DeFi history
Speaking of the end of the bull market, a massive slide in crypto markets triggered some $24 million in liquidations on Tuesday, the second highest loss in DeFi history. It would’ve been the highest if not for that infamous day in November when Compound thought Dai was worth $1.3.
The firesale was triggered by nothing in particular, though I suspect that rising bond yields are having their effect on the riskiest of assets on Wall Street, of which Bitcoin is the quintessential representative. And then Bitcoin dragged the rest of crypto with it.
I don’t normally talk about price because I’m not a financial advisor or even a successful trader. But I am feeling a lot of fundamental and sentimental indicators of a coming correction, ranging from a wavering stock market to, well, the strength of Tuesday’s dump.
To top it all off, my non-crypto feeds are being invaded by crypto stuff, which is never a good sign. I certainly hope that I’m misinterpreting what is actually unprecedented adoption and acceptance, but let’s face it — it’s all about price for now, while fundamentals are still lagging.
With layer two platforms and new blockchains coming online, we may get something useful out of crypto and DeFi soon. But everything could happen before we get there. Be especially careful right now and, most importantly, don’t get liquidated.
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