Category: Cryptocurrency

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The crypto lending sector is experiencing a revival following the “crypto winter” that saw the collapse of major players, thanks to the introduction of spot Bitcoin exchange-traded funds and the return of assets to creditors from bankrupt companies.

“What I’m seeing is that this market has come back roaring,” Mauricio Di Bartolomeo, co-founder of crypto lending firm Ledn, told CoinDesk at the Consensus 2024 conference in Austin, Texas. “The market never really left; it [just] got scared.”

Crypto lending functions similarly to traditional banking. Customers deposit Bitcoin or other cryptocurrencies with firms like Ledn, earning interest or using the crypto as collateral for loans. The interest paid to depositors is generated by lending their crypto to others at a higher interest rate.

The sector collapsed in 2022 when crypto prices plummeted, leading to bankruptcies of companies like Celsius, BlockFi, and Genesis. Since then, the digital asset market has rebounded. The CoinDesk 20 Index has surged over 200% since the end of 2022. The rally gained momentum after BlackRock (NYSE:BLK) and other financial giants successfully applied to create Bitcoin ETFs in the U.S. Di Bartolomeo attributes the renewed interest in crypto lending to the positive outlook surrounding these funds.

“Bitcoin has gone up from $20,000 to $70,000 and has become a focal point in the U.S. political race,” he said. “This increased interest validates Bitcoin as an asset and collateral for lending.”

Ledn processed more than $690 million in loans in the first quarter of this year, its best performance since its inception in 2018. Over 84% of these loans were directed to institutional clients, driven by the demand surge following the approval of Bitcoin ETFs in January. Ledn exclusively processes loans in Bitcoin, Ethereum, and two stablecoins: USDC and USDT.

The institutions involved are primarily market makers from both Wall Street and crypto-native companies. “These firms operate in both the ETF and spot markets,” Di Bartolomeo said. “Some have made their names in crypto, others in traditional finance.”

Another factor driving the resurgence in crypto lending is the return of funds to users from bankrupt firms. Many users, who had their investment thesis validated over time, are returning to the lending market. Di Bartolomeo explained that these “hardcore users” are likely to hold onto their assets and use the lending market to leverage them for borrowing and lending.

“What I’m seeing is undeniable proof that people want to hold their Bitcoin long-term and also want to utilize it,” he said. Traditional financial institutions may not recognize digital assets as collateral for loans, but firms like Ledn bridge this gap for customers.

Surviving the crypto winter, Ledn remained committed to lending and borrowing fundamentals. “Ledn only works with qualified and vetted institutions, avoids asset and liability mismatches, and steers clear of DeFi yield farming,” Di Bartolomeo explained. “If someone lends us Bitcoin,we lend Bitcoin; if someone lends us dollars, we lend dollars. There’s always a taker and always liquidity.”

He added that all lending and borrowing activities are term-matched, ensuring liquidity for the assets. “People called us boring, but we said this is our way: boring, slow, and safe,” he noted.

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Bitdeer, a prominent Bitcoin (BTC) miner, has announced its acquisition of Desiweminer, a designer of chips for ASIC mining machines, in a significant all-stock transaction valued at $140 million. This strategic move aims to bolster Bitdeer’s capabilities in ASIC chip design and enhance its position in the competitive cryptocurrency mining industry.

According to the announcement made on Thursday, Bitdeer will acquire all outstanding shares of Desiweminer for a consideration of 20 million Class A ordinary BTDR shares. The transaction is subject to customary closing conditions, signaling the culmination of negotiations between the two entities.

As part of the acquisition, the Desiweminer team will integrate with Bitdeer’s ASIC design team based in Singapore. This collaboration is expected to lead to the development of innovative products that leverage the combined expertise and technologies of both companies. These new offerings are set for immediate release, highlighting the swift integration efforts underway.

Bitdeer’s acquisition of Desiweminer comes shortly after receiving a substantial investment of $150 million from stablecoin company Tether at the end of last month. This injection of funds underscores Bitdeer’s commitment to expanding its operations and investing in strategic partnerships to drive growth in the evolving cryptocurrency market landscape.

Following the announcement, BTDR shares experienced a modest uptick, rising 0.54% to $7.05 in pre-market trading. This response indicates initial market confidence in the potential synergies and value creation expected from the acquisition deal.

Overall, Bitdeer’s acquisition of Desiweminer represents a strategic maneuver to strengthen its position in the competitive ASIC chip design market and reinforce its presence in the rapidly evolving cryptocurrency mining sector.

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Binance, the world’s largest cryptocurrency exchange, has resumed Mastercard payments for purchasing cryptocurrencies, marking a significant development in the crypto payment landscape. While Mastercard withdrawal services are not yet available, they are expected to be reinstated at a later date.

This move comes after Mastercard suspended crypto-related services on Binance in August 2023. The decision coincided with Binance facing legal challenges in the United States, including regulatory scrutiny from the U.S. Securities and Exchange Commission (SEC) and the U.S. Commodity Futures Trading Commission (CFTC).

After conducting a thorough review of Binance’s controls and processes, Mastercard decided to reinstate Binance-related purchases on its network. A spokesperson from Binance highlighted the extensive measures implemented by the exchange and expressed optimism about adding support for additional products, such as withdrawals, in the future.

Mastercard confirmed the restoration of service but emphasized that ongoing reviews would determine the continuation of Binance-related transactions on its network. This cautious approach underscores the importance of maintaining robust compliance measures in the cryptocurrency ecosystem.

Both Visa and Mastercard have shown enthusiasm for the cryptocurrency sector, venturing into Web3 and self-custody wallet solutions. The reinstatement of Mastercard payments on Binance reflects a broader trend of traditional financial institutions embracing the opportunities presented by cryptocurrencies and blockchain technology.

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Robinhood (NASDAQ:HOOD), the popular stock-trading app, is expanding its presence in the cryptocurrency market with the acquisition of global crypto exchange Bitstamp for approximately $200 million. The transaction is expected to finalize in the first half of 2025.

Robinhood, traditionally known for enabling everyday consumers to trade stocks, has been gradually increasing its involvement in the cryptocurrency sector. The company supports various popular cryptocurrencies, including Bitcoin, though it has previously restricted some due to U.S. regulatory scrutiny.

The acquisition of Bitstamp aligns with Robinhood’s strategy to deepen its crypto offerings and expand internationally. Robinhood launched its core stock-trading product in the U.K. last November and began offering crypto trading in the European Union shortly after.

Founded in Europe in 2011, Bitstamp is one of the oldest cryptocurrency exchanges globally, facilitating trading for companies and individuals. It was acquired by Belgian investment company NXMH in 2018, with Ripple also buying a stake last year.

Robinhood went public in mid-2021, initially thriving during the pandemic before seeing its valuation drop from an IPO peak of over $40 billion to below $10 billion. However, the company has experienced a resurgence, with its valuation more than doubling in the past year to $19 billion, driven by record earnings. In Q1 2024, Robinhood reported a 16% increase in monthly active users year-over-year to 13.7 million and a 40% rise in revenues to $618 million. Notably, transaction-based revenue surged by 59% to $329 million, largely due to a 232% increase in cryptocurrency income, totaling $126 million.

With Bitstamp, Robinhood aims to enhance its position among retail and institutional crypto investors in Europe, Asia, and the U.S. Bitstamp currently holds over 50 licenses and registrations to operate in these regions.

“The acquisition of Bitstamp is a significant milestone in expanding our crypto business,” said Johann Kerbrat, Robinhood’s crypto general manager. “The Bitstamp team has built one of the strongest reputations among both retail and institutional crypto investors. This strategic combination positions us to extend our reach beyond the U.S. and attract institutional customers to Robinhood.”

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Bitcoin miner Core Scientific (NASDAQ:CORZ) has rejected an all-cash buyout offer from Nvidia-backed cloud provider CoreWeave, stating that the offer undervalues the company.

“The board concluded that the CoreWeave proposal significantly undervalues the company and is not in the best interests of the company and its shareholders,” Core Scientific announced in a statement.

Core Scientific received the unsolicited, non-binding proposal from CoreWeave on June 3. The offer aimed to acquire all of Core Scientific’s outstanding shares on a fully diluted basis for $1.02 billion, or $5.75 per share in cash.

Despite the rejection, the two companies have signed a series of 12-year contracts on the same day. These agreements include a deal where Core Scientific will provide CoreWeave with approximately 200 MW of infrastructure to support its high-performance computing services.

Cryptocurrency mining requires substantial electricity, leading larger companies and AI technology firms to target these miners to consolidate power supplies for their energy-intensive operations.

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Bitcoin has extended its winning streak to five consecutive sessions, edging closer to the $71,000 mark amidst growing expectations of Federal Reserve interest-rate cuts later this year.

The cryptocurrency’s sustained upward momentum marks its longest series of daily gains in three months, with Bitcoin trading at $70,785 as of 8:25 a.m. Wednesday in New York, just 4% below its all-time high of $73,798 reached in mid-March.

Investors are increasingly factoring in the likelihood of a Fed rate cut as early as November, spurred by indications of moderating US inflation and a softer job market. This shift in market sentiment has led to a notable decline in Treasury yields over the past two days, easing financial conditions and bolstering speculative assets like cryptocurrencies.

According to Tom Couture, vice president of digital-asset strategy at Fundstrat Global Advisors, the positive response from crypto assets can be attributed to the decrease in interest rates.

The rally in cryptocurrencies is not limited to Bitcoin alone, with other top coins such as BNB and Solana experiencing gains over the past 24 hours. BNB, in particular, has surpassed its previous all-time high from 2021, reflecting improved sentiment towards the Binance ecosystem despite regulatory challenges earlier in the year.

While Bitcoin has faced resistance in maintaining its position above $70,000, optimism persists due to increased inflows into dedicated US exchange-traded funds and ongoing developments towards a regulatory framework for cryptocurrencies in Washington.

Elsewhere, in Japan, crypto exchange DMM Bitcoin announced plans to raise funds to compensate customers affected by a recent hack, highlighting ongoing challenges in the industry.

Amidst these developments, Bitcoin’s correlation with the Nasdaq 100 Index of US technology stocks has reached its highest level since early 2023, suggesting a potential alignment between equity market gains and further appreciation in the cryptocurrency market.

Michael Novogratz, founder and CEO of Galaxy Digital, expressed optimism about Bitcoin’s future, predicting a record high of $100,000 or higher by the end of the year, buoyed by a more favorable regulatory environment in the United States. This positive sentiment reflects a shift from the uncertainties and scandals that plagued the cryptocurrency market in previous years.

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Kerrisdale Capital Management LLC, known for its short-selling strategies, has set its sights on Riot Blockchain Inc., criticizing its business model as flawed in the challenging landscape of Bitcoin mining. According to Kerrisdale, investing in Bitcoin directly is a more viable option for cryptocurrency enthusiasts than purchasing miner stocks.

The report released by Kerrisdale founder Sahm Adrangi highlighted Riot’s shareholder dilution due to the company’s stock-selling practices. Additionally, Adrangi’s letters to Texas government officials raised concerns about Riot’s energy usage practices and its impact on the state’s energy laws.

Shares of Riot, based in Castle Rock, Colorado, experienced a decline of up to 8.9% following the publication of Kerrisdale’s report. The company has yet to respond to requests for comment from Bloomberg News.

Adrangi emphasized that Bitcoin mining is a highly competitive commodity business with minimal barriers to entry, particularly as new mining projects emerge globally. He argued that the current valuations of Bitcoin miners do not justify investment, especially considering the availability of low-fee exchange-traded funds for investors seeking exposure to Bitcoin.

This isn’t the first time Kerrisdale has targeted companies with exposure to cryptocurrencies. In March, the firm recommended a pair trade involving shorting MicroStrategy Inc. while taking a long Bitcoin position, a strategy that has proven successful thus far.

However, there are potential risks associated with shorting Bitcoin miners, as demonstrated by Core Scientific Inc.’s recent surge in stock price following news of long-term contracts and acquisition offers. Despite the challenges highlighted by Kerrisdale, the dynamic nature of the cryptocurrency market leaves room for miners to adapt their business models and attract investors or strategic buyers.

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Core Scientific (NASDAQ:CORZ), a Bitcoin mining company, saw its shares surge up to 40% in pre-market trading following a significant AI deal with cloud computing firm CoreWeave and a reported buyout offer from the same company.

CoreWeave has reportedly made an all-cash offer to purchase Core Scientific, implying a 55% premium over the miner’s three-month average weighted share price as of May 31, according to Bloomberg, which cited an anonymous source. This offer values the Austin, Texas-based miner at over $1 billion, considering its 178 million outstanding shares. Core Scientific recently emerged from bankruptcy after suffering during a harsh crypto winter.

Neither CoreWeave nor Core Scientific immediately responded to requests for comments on the matter.

In addition to the buyout offer, CoreWeave signed a 12-year deal with Core Scientific to host AI-related services, committing around $300 million in capital investments with options for capacity expansion.

This development follows a trend of increasing mergers and acquisitions in the mining sector. Notably, Riot Platforms (NASDAQ:RIOT) recently made a hostile bid to acquire peer Bitfarms (NASDAQ:BITF).

CoreWeave raised $1.1 billion in new funding in May, with investors including Coatue Management and Magnetar Capital.

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In a notable development, global Bitcoin funds observed substantial net inflows amounting to $148 million last week, as reported by CoinShares. This surge in investments contrasts sharply with short Bitcoin products, which experienced outflows totaling $3.5 million. Additionally, Ethereum funds attracted $33.5 million, marking the second consecutive week of positive inflows following a prolonged period of minimal activity.

CoinShares highlighted this trend as indicative of a shift in investor sentiment towards Ethereum. Notably, Ethereum had endured 10 weeks of outflows totaling $200 million. The renewed interest in Ethereum has also positively impacted Solana, with $5.8 million in inflows recorded amid speculation about potential Solana ETFs and other altcoin products.

While the bulk of these inflows originated from the United States, significant crypto investments were also reported in Canada and Switzerland. Ethereum continues to enjoy strong institutional support in these regions, alongside Bitcoin.

Experts anticipate the debut of Ethereum ETFs as early as July, with projections suggesting they could capture approximately 20% of the demand witnessed by Bitcoin ETFs. Bloomberg ETF analyst Eric Balchunas commented last week that securing 20% of Bitcoin ETF demand would represent an exceptionally successful launch by typical ETF standards.

The surge in inflows into Bitcoin and Ethereum funds underscores the growing investor interest in cryptocurrencies, particularly in anticipation of new investment opportunities such as ETH spot ETFs. As the cryptocurrency market continues to evolve, the introduction of Ethereum ETFs could further enhance accessibility and diversification options for investors, potentially driving further growth and adoption in the crypto space.

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Digital assets firm Galaxy Digital has granted a multimillion-dollar loan to Yat Siu, the co-founder of Animoca Brands, using a unique collateral combination: a tokenized 1708 Stradivarius violin and its corresponding non-fungible token.

Valued at over $9 million, the violin boasts a storied history, including ownership by Russian Empress Catherine the Great. This deal could set a precedent for the tokenization of physical assets, potentially revolutionizing collateralization and opening new investment opportunities for high-value items.

Galaxy Digital’s decision to tokenize the Stradivarius violin, crafted by the esteemed Stradivari family, merges the art world with blockchain technology. The physical violin will be securely stored in Hong Kong, while its digital counterpart facilitates the loan process.

Tokenization involves converting a tangible asset into a digital token tradable on blockchain platforms, offering a novel approach to asset management. Several asset managers are optimistic about the future of tokenization.

A report by 21.co late last year projected that the tokenization market could scale to $3.5 trillion in a bear-case scenario, or up to $10 trillion in a bull case.

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