NYDIG and its strategic partners will work together on Bitcoin-related initiatives following a $200 million funding round.
New York Digital Investment Group announced the completion of a $200-million growth capital funding round for business initiatives relating to Bitcoin (BTC). The funding round was led by NYDIG strategic partners Morgan Stanley, Stone Ridge Holdings Group, Soros Fund Management and MassMutual, among others.
NYDIG, a provider of Bitcoin-related technology and investment services, will work alongside its strategic partners in applying Bitcoin-focused solutions to the insurance, banking and clean energy industries. NYDIG’s co-founder and CEO, Robert Gutmann, said:
“The firms participating in this round are more than investors — they are partners, each well known to us for years. NYDIG will be working with these firms on Bitcoin-related strategic initiatives spanning investment management, insurance, banking, clean energy, and philanthropy.”
“These partnerships leave no doubt that institutional adoption of Bitcoin has arrived and, further, that NYDIG is the partner of choice for serious financial services firms with the highest fiduciary and diligence standards,” said Gutmann, adding: “In the months and quarters ahead, look out for an explosion of innovation in Bitcoin products and services delivered by NYDIG, in partnership with our new investors.”
NYDIG also announced on Monday that among life, annuity, and property and casualty insurers who utilize its platform, over $1 billion worth of Bitcoin investments are now held in its institutional custody service.
The founder and executive chairman of NYDIG, Ross Stevens, said the latest round of funding from institutional investors was good for the company and BTC. “I am thrilled by what this group of incredible investors will mean for NYDIG, but especially for Bitcoin,” said Stevens.
Not all cryptocurrencies have the attributes desired by central banks for hosting CBDCs.
A 44-page report commissioned by CPA Australia delves into the status of Central Bank Digital Currency development worldwide, while exploring viable blockchain candidates for hosting CBDCs in the coming years.
The report offers up evaluations of the three most transacted cryptocurrencies in Bitcoin (BTC), Ethereum (ETH) and XRP (XRP), and analyses their suitability (or lack thereof) for use by central banks.
Bitcoin’s decentralized network and lack of oversight by banks or governments makes it generally unsuitable for use in a national CBDC network, notes the report. Although Bitcoin is still accepted as a medium of exchange the world over, its volatility and unpredictability has resulted in a lack of trust among central banks. The report states:
“Despite it not being legal tender, Bitcoin is popular, and it is accepted as a medium of exchange in many places. Bitcoin’s price has been subject to spectacular volatility in recent years and this volatility has resulted in a lack of confidence in Bitcoin as a medium of exchange or as a store of value and raised concerns among central banks as to the viability of cryptocurrencies as CBDCs.”
While Bitcoin continues to puzzle and confound lawmakers in most jurisdictions, the report also notes that its legal status as a currency is undergoing a transformation. The report cites a ruling by the Commercial Court of Nanterre in France in 2020, which declared that “Bitcoin is an intangible asset with an exchange value, equivalent to fiat money at law.”
“This, along with a January 2020 UK High Court decision recognising digital currency as property, and a February 2020 NSW District Court decision that acknowledges digital currency as a store of value, the legitimacy of digital and cryptocurrencies is gaining credence from a legal and economic standpoint,” states the report.
Ethereum suffers from many of the same pitfalls as Bitcoin when it comes to hosting CBDCs, according to the report. Despite allowing for “programmable money” through the use of smart contracts, Ethereum’s decentralization and inability to be controlled by any state actor make it an unlikely candidate for hosting CBDCs. The report states:
“ETH is like Bitcoin, in that it is purely digital, fully decentralised outside any state control. An important distinguishing feature of Ethereum platform compared to the Bitcoin blockchain is that it allows for the operation of smart contracts, and therefore programmable money and payments.”
A slightly more optimistic view is offered regarding the use of Ripple and XRP. According to the report, the Ripple Network and the XRP coin are looked on more favourably by banks and governments due to their centralized nature. The report states:
“Ripple and XRP enjoy the trust of many banks as a model for CBDCs because it is highly centralised and is based on a permissioned network where only certain network nodes can validate transactions, as opposed to decentralised and permissionless Bitcoin and Ether.”
The report claims that the centralized nature of Ripple’s operations makes it similar to central banks, due to how developers can control the “timing and quantity of supply” of its associated tokens. It states: “Ripple also allows the creation of new currencies and Ripple developers can decide the timing and quantity of supply in a similar way to current central bank operations.”
The report also notes that Ripple “does not operate on a blockchain network per se,” referencing the Ripple Protocol consensus algorithm (RPCA), which it rightly states is Ripple’s own patented technology.
The report points out that France’s central bank, the Banque de France, has already expressed interest in exploring Ripple as a possible platform for hosting a Europe-wide CBDC.
In summary, the report notes that the COVID-19 pandemic has accelerated the digital transformation, spurring faster development of digital payment systems, blockchain projects, and the financial technology sector at large.
Between the rise of Bitcoin, and the emergence of corporate-led financial infrastructures like Facebook’s Libra (now Diem), central banks are being forced to keep a close eye on the ongoing development of blockchain and cryptocurrency projects.
As Welt market analyst, Holger Zschaepitz, explained, the bond market turned into turmoil as the 10-year U.S. Treasury yield surged to 1.6% after the stimulus news broke.
The instability in the bond market naturally led to a sell-off of risk-on assets, affecting both stocks and cryptocurrencies. The analyst wrote:
“Bond turmoil continues w/US 10y yields jump to almost 1.6% as the $1.9tn US fiscal package alongside robust Chinese trade data fuel inflation fears.”
Stocks and Bitcoin have seen a tightening correlation in recent weeks likely due to the increasingl unfavorable macro landscape.
Peter Brandt, a long-time futures and FX trader, said he saw many correlations throughout his career. However, he said that correlations can also come to an end “dramatically.”
Hence, in the foreseeable future, Bitcoin could move in tandem with stocks as the markets react negatively to the rising Treasury yield. But on longer time frames, the bull run of Bitcoin could strengthen and gain momentum if the correlation begins to weaken. He said:
“Through my 46 yrs. trading I have seen MANY sacred correlations come and go Gold v. Yen or USD or stocks Silver vs. Gold Interest rates v. stocks or Gold BTC v. whatever Et al When these correlations come to an end, they often end dramatically Study each market with its own chart.”
Nevertheless, March may turn out to be a slow month for BTC trading with low volatility.
Is a bigger drop coming?
If the traditional market drops, traders seemingly anticipate a broader Bitcoin pullback in the near term.
For example, pseudonymous cryptocurrency trader Loma said a short-term drop to $48,000, an important support level, cannot be ruled out if the legacy markets continue to show weakness. He wrote:
“Base still forming, I’m liking how everything is playing out. Only concerns are temporary legacy market correlations so if we dump tomorrow, I’d anticipate a re-visit the lows or at least the EQ at ~$48k. Still taking it easy on trading, focusing more on $BTC and $ETH.”
This week, the key for Bitcoin is whether the DXY sees a pullback after a week-long rally, providing the risk-on market some room for a relief rally.
As Cointelegraph previously reported, the Treasury yield is also approaching a key resistance area, and if it gets rejected, Bitcoin could regain momentum in the near term to rally above the next big resistance areas at $52,000 and $53,000.