Day: May 2, 2024

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Coinbase announced a remarkable first quarter, with revenue reaching $1.6 billion, marking a substantial 72% increase from the previous quarter and a significant rise from $736 million in the same period last year. The company also reported a notable swing in net income, posting $1.18 billion for the quarter compared to a loss of $79 million in the previous year’s corresponding period. Additionally, Coinbase generated $1.01 billion in EBITDA, surpassing expectations with earnings of $4.04 per share, exceeding the consensus estimate of $1.15 per share.

The surge in revenue reflects Coinbase’s strategic investments in product expansion, operational discipline, and favorable market conditions, according to the company’s earnings statement. Notably, the company observed increased market share in US spot and derivatives, achieving all-time highs on Coinbase Prime, and witnessing growth in USDC market capitalization.

Transaction revenue for both consumer and institutional clients experienced a substantial uptick, totaling $1.08 billion for the quarter. Institutional transaction revenue notably grew by 113% from the previous quarter to $85 million. Coinbase’s consumer-facing business remained its primary revenue stream, generating $935.2 million from consumer transactions. The company also reported growth in user numbers alongside revenues collected from its subscription service.

Looking ahead, Coinbase anticipates continued growth, stating that it generated over $300 million of total transaction revenue in April, with expectations for Q2 subscription and services revenue to fall within a range of $525-$600 million.

Despite surging nearly 9% in regular trading, Coinbase shares dipped about 3% in after-hours trading to $222 as of 4:32 p.m. ET. Nonetheless, Coinbase shares have seen a remarkable increase of nearly 50% over the past year.

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Tether announced on Thursday its collaboration with blockchain surveillance firm Chainalysis to monitor transactions involving its tokens on secondary markets. The move aims to enhance Tether’s ability to identify and address potential risks associated with illicit activities such as terrorist financing and sanctions evasion.

The monitoring system, which includes capabilities for international sanctions compliance and detection of illicit transfers, will enable Tether to identify crypto wallets that may pose risks or be linked to illicit and/or sanctioned addresses. Tether CEO Paolo Ardoino emphasized the significance of this collaboration in promoting transparency and security within the cryptocurrency industry.

This partnership comes amidst growing regulatory pressure on Tether globally, with concerns raised about USDT’s purported role in circumventing international sanctions and facilitating illicit finance. Reports have surfaced of Venezuela’s state-run oil company using USDT to bypass U.S. sanctions, while a United Nations report highlighted the stablecoin’s involvement in underground banking and money laundering in East Asia and Southeast Asia.

USDT, with a circulating supply exceeding $110 billion, maintains a peg to the US dollar and is primarily backed by U.S. Treasury bonds held in reserve, managed by Cantor Fitzgerald. Tether recently reported first-quarter earnings of $4.52 billion, underscoring its prominence in the cryptocurrency market despite regulatory challenges.

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LayerZero has taken a snapshot as it gears up for its anticipated airdrop, scheduled for the first half of 2024. A snapshot typically precedes outflows as investors participating in airdrops often redistribute liquidity to other projects.

Developers of the cross-chain interoperability protocol hinted at additional airdrops in the pipeline, signaling ongoing developments within the ecosystem. The recent snapshot, labeled as “snapshot #1,” marks the first step in a series of planned airdrops.

LayerZero stands out as a protocol facilitating blockchain connectivity without relying on intermediaries. Currently utilized by platforms like Stargate and Radiant Capital, both experienced modest token gains following the confirmation of the snapshot.

In April, LayerZero secured $120 million in a Series B funding round, valuing the company at $3 billion. Notable investors in the round included Andreessen Horowitz and Sequoia Capital, indicating strong support for LayerZero’s vision.

As snapshots pave the way for potential outflows, investors utilizing protocols for airdrop allocations can strategically allocate liquidity to maximize their participation in various projects. Recent data from DefiLlama indicates a net outflow of $5 million from the Stargate bridge in the last 24 hours, with $43 million deposited and $48 million withdrawn.

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Robert Mitchnick, BlackRock’s(NYSE:BLK) head of digital assets, revealed that financial institutions are engaging in diligence and research discussions, with BlackRock providing educational support. BlackRock has been actively discussing bitcoin with these institutions for several years.

Despite the recent break in inflows into spot bitcoin exchange-traded funds, BlackRock anticipates a resurgence driven by a new wave of investors, including sovereign wealth funds, pension funds, and endowments. Mitchnick highlighted the renewed interest in bitcoin and the ongoing discussions surrounding portfolio allocation strategies.

Mitchnick emphasized that various institutions, including pensions, endowments, sovereign wealth funds, insurers, asset managers, and family offices, are conducting continuous due diligence and research. BlackRock’s role is to facilitate education in navigating the complexities of bitcoin investment.

While attention has been drawn to the assets under management  race between BlackRock’s IBIT ETF and Grayscale’s GBTC, Mitchnick stressed that BlackRock’s focus lies on client education rather than size competition. Despite IBIT’s impressive AUM of $17.2 billion compared to GBTC’s $24.3 billion, BlackRock prioritizes client understanding and adoption.

BlackRock’s interest extends beyond bitcoin, as evidenced by its filing for an ether ETF. Mitchnick highlighted the potential benefits of digital assets across cryptoassets, stablecoins, and tokenization. While acknowledging the complexity of the Ethereum blockchain ecosystem, BlackRock remains committed to educating clients on the broader implications and opportunities within the digital asset space.

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MicroStrategy, known as the largest corporate holder of bitcoin, has announced its intention to develop a decentralized identity service utilizing Ordinals inscriptions.

Earlier this year, the software consulting firm rebranded itself as a “bitcoin development company,” emphasizing its commitment to advancing the Bitcoin network through various means such as financial markets, advocacy, and innovation. The unveiling of “MicroStrategy Orange” signifies the company’s dedication to realizing this objective.

MicroStrategy Orange aims to offer decentralized identities that are “trustless, tamper-proof, and long-lived,” according to founder Michael Saylor. The service will enable users to issue decentralized identifiers (DIDs), ensuring pseudonymity similar to bitcoin transactions, which are not directly linked to real-world identities.

Leveraging Bitcoin’s Ordinals Protocol, MicroStrategy Orange enables the storage and communication of information on individual satoshis, the smallest unit of bitcoin.

MicroStrategy has already developed an application called “Orange For Outlook” using its decentralized identity service. This application integrates digital signatures into emails, allowing recipients to verify the identity of the sender securely.

Currently, MicroStrategy holds a substantial amount of bitcoin, totaling 214,400 BTC, which amounts to approximately $10 billion. This constitutes more than 1% of the total bitcoin supply that will ever exist.

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MoonPay, a popular cryptocurrency purchasing app, has forged a partnership with financial services behemoth PayPal to offer American users a streamlined method for buying cryptocurrencies using their PayPal accounts.

This collaboration aims to streamline the process of purchasing cryptocurrencies for millions of Americans. It enables users to conduct wallet transfers, bank transfers, and debit card transactions directly within the MoonPay app, as reported by Coindesk.

The integration represents a strategic expansion for PayPal, which currently provides a limited range of major cryptocurrencies. Through MoonPay’s infrastructure, PayPal users gain access to a broader array of popular tokens.

Ivan Soto-Wright, the co-founder and CEO of MoonPay, described the partnership as “symbiotic,” emphasizing its benefits for both MoonPay users and PayPal’s cryptocurrency offerings.

“This is not merely an integration; it involves embedding PayPal within MoonPay’s framework,” Soto-Wright explained.

He underscored the significance of this collaboration, highlighting the extensive process required to align with PayPal’s operational standards.

“We are the first company to achieve this with PayPal, and it involved a lengthy process to gain their confidence,” he added.

MoonPay, which handles billions of dollars in cryptocurrency transactions via debit and credit cards, views this partnership as a crucial advancement in reaching a broader customer base. It particularly benefits users who may have encountered banking restrictions or card declines when attempting to purchase cryptocurrencies.

As digital assets gain momentum, such collaborations become increasingly pivotal. They not only enhance the user experience by offering more flexible payment options but also signify the growing acceptance of cryptocurrencies within mainstream financial services.

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JPMorgan, a prominent financial institution on Wall Street, maintains a cautious outlook on cryptocurrency markets in the short term due to several factors, including the fading retail impulse and the absence of positive catalysts.

According to the bank’s analysis, retail investors were significant contributors to the recent sell-off in both crypto and equity assets during April. Moreover, spot bitcoin exchange-traded funds (ETFs) experienced outflows, indicating a decline in retail interest. The bank identifies three main challenges persisting in the market: high positioning levels, elevated bitcoin prices compared to gold and production costs, and subdued crypto venture capital (VC) funding.

The recent profit-taking in cryptocurrency markets has been notably driven by retail investors, overshadowing the involvement of institutional investors. Bitcoin, for instance, witnessed a 16% decline in April, marking its largest monthly drop since June 2022.

In a notable development, U.S.-based spot bitcoin ETFs recorded their highest-ever net outflows on Wednesday, totaling $563.7 million across 11 ETFs. This significant withdrawal occurred despite these funds only commencing trading on January 11.

JPMorgan’s analysis suggests that institutional investors, particularly momentum traders like commodity trading advisors (CTAs), have been capitalizing on previous extensive positions in bitcoin and gold. However, the reduction in positions by other institutional investors outside of quantitative funds and CTAs appears to be more limited, as indicated by futures market data.

In summary, while retail investors have played a prominent role in the recent crypto market sell-off, institutional investors, particularly momentum traders, have also been active in adjusting their positions. JPMorgan’s cautious stance reflects the ongoing challenges and uncertainties prevailing in the cryptocurrency landscape.

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