2024-02-16 14:21

Higher crypto prices will have a positive effect on the exchange’s revenue, the analysts said. Coinbase fourth-quarter earnings beat analyst expectations. KBW upgraded the stock to market perform from underperform. Shares surged as much as 15% in premarket trading. Crypto exchange Coinbase (COIN) reported fourth-quarter earnings yesterday after the market close, beating consensus estimates. The stock pumped 15% higher in pre-market trading Friday, as some Wall Street analysts upgraded the stock and lifted their price targets. Here’s what they said: KBW upgraded Coinbase to market perform from underperform and lifted its price target to $160 from $93. The bank said it is “skeptical that the current level of retail enthusiasm/speculative activity can persist for a prolonged period.” Still, it upgraded the stock to reflect higher crypto prices year-to-date and the positive knock-on effect on revenue. It also noted a tailwind from a “material inflection” in USD Coin (USDC) balance growth, which is up 15% this year. Wedbush reiterated its outperform rating and raised its price target to $200 from $180. The investment firm said the results “adequately address the bear arguments on COIN.” There was no apparent fee compression or cannibalization from exchange-traded funds (ETFs), and the exchange continues to reduce its exposure to retail and trading fees while growing its institutional exposure. Canaccord Genuity maintained its buy rating on the stock, raising its price target to $240 from $140. The firm cited positive tailwinds for the business and the industry in general. JMP Securities kept its outperform rating and increased its price target to $220 from $200. It said it was pleased by the exchange’s fourth-quarter performance and even more encouraged by its outlook. Mizuho Securities was less bullish. The firm said it remains cautious about Coinbase shares following the earnings report, adding that while the firm reported revenue and EBITDA that beat estimates, “consensus was out of tune.” A key disappointment was the retail take rate falling by 80 basis points quarter-on-quarter. The investment bank reiterated its underperform rating and $60 price target. Read more: Coinbase Upgraded to Neutral Ahead of Earnings at JPMorgan as Shares Surge https://www.coindesk.com/markets/2024/02/16/coinbase-analysts-turn-more-bullish-on-crypto-exchange-after-earnings-beat-shares-climb/

2024-02-16 14:01

Restitution paid to victims can be considered when sentencing, and judges in the Southern District of New York routinely impose shorter terms than guidelines suggest for white-collar cases. Sam Bankman-Fried, found guilty of fraud last year, is due to be sentenced next month. The FTX bankruptcy looks likely to make its creditors whole as a result of the jump in crypto markets matters. Restitution paid to victims is a factor when it comes to sentencing, but only when the return took place before the offense was detected. Former FTX boss Sam Bankman-Fried (SBF) may be handed a lighter sentence than otherwise when he faces District Judge Lewis A. Kaplan next month because customers of the bankrupt exchange will probably be made whole thanks to a bounce in crypto markets and the buoyancy of certain investments held by the estate. Bankman-Fried was found guilty of fraud in November 2023, about a year after his crypto trading empire collapsed. During the bankruptcy process, the crypto market has risen sharply – CoinDesk Indices' CD20 gauge has gained more than 130% – meaning many thousands of hapless creditors are going to receive all the funds they had locked in, albeit at November 2022 prices. In July last year, the bankruptcy team said customers were owed $8.7 billion. The jump in crypto markets matters because restitution can be taken into account for sentencing. For example, for low losses, the guidelines suggest a range of 24-30 months. A high-loss amount, in contrast, could lead to a draconian range of upwards of 20 years’ imprisonment, or even life, according to Jordan Estes, a partner at the New York City office of law firm Kramer Levin. “I would expect the loss amount to be hotly contested at sentencing,” said Estes, a former assistant U.S. attorney who co-led the general crimes unit in the Southern District of New York, where the trial took place. “In particular, the defense may argue for a substantially lower loss amount, or even a loss amount of $0, if all customers and creditors will be made whole,” she told CoinDesk via email. That said, the U.S. sentencing guidelines that give defendants credit for amounts returned to victims apply only when the return took place before the offense was detected. In this case, it’s clearly not SBF who is giving the money back, and the payments come well after discovery of the offense. A possible parallel is the case of fraudulent financier Bernie Madoff, who died in prison at the age of 82 while serving a series of consecutive sentences that ran to 150 years. In Madoff's case, the bankruptcy trustee also recovered large sums of stolen money, but he didn't receive any credit for that. Prosecutors estimated the size of the fraud to be $64.8 billion. Judges in the Southern District of New York often impose sentences below the guideline range in white-collar cases – easier now that they are advisory rather than mandatory – but when the court views conduct as particularly egregious, there is equal latitude to impose a higher sentence than the guidelines suggest, according to Martin Auerbach, an of counsel who specializes in white collar defense at international law firm Withers. “The magnitude of SBF's offense, as well as considerations like its sophistication, and the court's likely view that SBF's testimony was untruthful at trial and is a compounding factor (in addition to reflecting a lack of acceptance of responsibility), may well lead the court to impose a hefty and carefully constructed sentence that would be difficult to challenge effectively on appeal,” Auerbach said in an email. https://www.coindesk.com/policy/2024/02/16/sam-bankman-frieds-sentence-might-be-lighter-than-youd-expect/

2024-02-16 11:30

Bitcoin has managed to chalk out a double-digit rally recently, ignoring the strength in the dollar index and Treasury yields. Bitcoin’s latest move above $50,000 contradicts its record of posting sharp gains, mostly during bouts of weakness in the dollar index and Treasury yields. We could be seeing safe-haven demand for bitcoin from regions like China and Nigeria, one observer said. Bitcoin (BTC) has jumped over 35% to over $52,000 since Jan. 23, consistent with its reputation of chalking double-digit gains in a matter of weeks. The latest move, however, stands out because it has materialized alongside a resurgent U.S. dollar index (DXY) and Treasury yields. The DXY, which gauges the greenback’s exchange rate against major fiat currencies, has gained 3% this year, with the index gaining around 1% since Jan. 23. Historically, bitcoin has been negatively correlated with the U.S. dollar, posting sharp rallies only during bouts of dollar weakness. For instance, the DXY fell 2% to under 90 in February 2021 when bitcoin first rose above $50,000. As a global reserve, the U.S. dollar is outsized in international finance and non-bank borrowings. Thus, a strengthening dollar leads to financial tightening worldwide, disincentivizing investment in risky assets like technology stocks, cryptocurrencies and commodities like gold. Similarly, an uptick in the 10-year U.S. Treasury yield, or the so-called risk-free rate, usually spurs outflows from other assets. The yield has risen from 4.10% to 4.26% in three weeks, with hotter-than-expected U.S. inflation figure denting the probability of an early Fed rate cut. Bitcoin’s resilience likely stems from strong inflows into the U.S.-based spot exchange-traded funds in the U.S. Nearly a dozen ETFs began trading in the U.S. on Jan. 11 and have since amassed roughly $5 billion in net inflows. “What we started seeing when BTC didn’t drop along with the jump in DXY and U.S. yields was the beginning of strong inflows – there was buying pressure offsetting the usual sell pressure, and that seems to be picking up,” Noelle Acheson, author of the popular Crypto Is Macro Now newsletter, told CoinDesk. “We could be seeing more ‘safe-haven’ buying from regions such as China, Nigeria and others - we’re probably also seeing some speculative inflows front-running the growth of the investor base and the halving,” Acheson added. China, the world’s second-largest economy, has been facing deflationary pressures, a property market crisis, and a stock market meltdown. Per Reuters, Chinese citizens have turned to bitcoin amid economic malaise. Similarly, Nigeria’s ongoing currency crisis and rampant inflation may have spurred cryptocurrency demand. Acheson said that bitcoin has always been a safe haven for some and an emerging technology play (or risk asset) for others, explaining the hedging demand for the cryptocurrency. “The ETFs don’t change that, they just act as a channel,” he added. Meanwhile, according to QCP Capital, the CME’s decision to increase the required margin for trading its bitcoin futures may have contributed to the bitcoin rally. “This has recently become an important trigger for volatility. In this case, leveraged players were positioned short, and the new requirement resulted in widespread short covering over a relatively illiquid Lunar New Year weekend. This drove both spot prices and forwards higher. The forward spread trade in BTC is now back to around 11-12% annually,” QCP said on X. https://www.coindesk.com/markets/2024/02/16/bitcoins-latest-rally-is-different-as-btc-rises-alongside-us-dollar-and-treasury-yields/

2024-02-16 09:06

USDT's appeal relative to other stablecoins will likely diminish as regulations will require more transparency and compliance with new anti-money laundering standards, the report said. The U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) can exert some control over the stablecoin issuer’s offshore usage. Tether’s association with crypto-mixer Tornado Cash is one such example. International cooperation could hinder the usage of USDT. Tether’s (USDT) dominant position as the largest stablecoin is vulnerable due to its dependence on the American market and pending regulations, JPMorgan (JPM) said in a research report Thursday. Despite Tether not being based in the U.S., regulators are able to exert some control on the stablecoin issuer’s offshore usage through the Office of Foreign Assets Control (OFAC), the report said. The stablecoin's association with Tornado Cash is one such example, the bank said, noting that OFAC blacklisted the crypto-mixer that ran on the Ethereum network in August 2022, accusing it of facilitating money laundering. “While direct legal actions against offshore entities and decentralized firms are complex, indirect measures and international cooperation could potentially hinder the usage of tether,” analysts led by Nikolaos Panigirtzoglou wrote. Forthcoming stablecoin regulation will probably put “indirect pressure on tether as its attractiveness would diminish relative to stablecoins with more transparency and greater compliance with new regulatory KYC/AML standards,” the authors wrote, adding that this issue would also apply to decentralized finance (DeFi), where USDT is used as a source of collateral and liquidity. KYC refers to customer identification and AML to anti-money laundering regulations. “Stablecoin regulations, in particular, are set to be coordinated globally via the Financial Stability Board (FSB) across the G20, further constraining the usage of unregulated stablecoins such as tether,” the report added. Tether has come under pressure to be more transparent about how its reserves are invested, and has been working toward publishing real-time data. Still, JPMorgan says the latest disclosures by the stablecoin issuer are not enough to reduce concerns. The Wall Street giant previously argued that USDT’s dominance was bad for the wider crypto ecosystem, a claim that was rebutted by Tether’s CEO Paolo Ardoino who said in emailed comments that it “seems hypocritical to talk about growing concentration from the biggest bank in the world.” https://www.coindesk.com/policy/2024/02/16/us-regulators-do-have-some-control-over-stablecoin-tether-jpmorgan/

2024-02-16 07:25

Bitcoin has rallied 35% in three weeks, with mining reward halving due in April. Lyra’s decentralized bitcoin options marketplace suggests a 20% probability of prices rising above $70,000 by the end of April. Lyra recently listed options with an April 26 expiry, allowing traders to speculate on price trends ahead of and following bitcoin’s reward halving due in mid-April. There is a one-in-five chance of bitcoin (BTC) crossing $70,000 by the end of April, according to options data from decentralized marketplace Lyra Finance. "Lyra’s markets are implying a roughly 20% chance of bitcoin hitting fresh all-time highs (trading higher than $70,000) by April 26," Nick Forster, Lyra's founder and former Wall Street options trader, told CoinDesk in an interview. Traders on Lyra had correctly positioned themselves for bitcoin’s recent move above $50,000. Their latest view – the low probability of a record move above $70,000 by the end of April – might be a surprise. That’s because bitcoin has risen 35% to $52,000 in three weeks, the highest since late 2021, exhibiting a robust bullish momentum fueled by strong inflows into the U.S.-based spot ETFs. The consensus among crypto traders is that bitcoin could see further gains as fiscal policy in the U.S. remains the most stimulative in years, compensating for higher interest rates. Bitcoin blockchain’s supposedly bullish quadrennial mining reward halving is also due in April, and global recession probability has declined to its lowest since December 2021, supporting risk-taking across all corners of the financial market. Options are derivatives that give the purchaser the right, but not the obligation, to buy or sell an underlying asset at a predetermined price at a later date. A call option gives someone the right to buy an asset, while a put option confers the right to sell. The way options are priced at a given time offers clues on where sophisticated traders see the market heading in the coming weeks and months. Lyra is the world’s biggest decentralized crypto options venue, accounting for 50% of the global decentralized exchange (DEX) options volume of $32 million in the past 24 hours, according to DeFiLlama. The protocol recently listed bitcoin options with an expiry date of April 26, allowing traders to bet on the price action ahead of and immediately following the reward halving, which is due in mid-April and is programmed to reduce the pace of BTC supply expansion by 50%. “Early trading activity [in the April 26 expiry] has been concentrated in the upside, with call buyers lighting up the $64,000 and $70,000 strikes,” Forster said. https://www.coindesk.com/business/2024/02/16/crypto-traders-see-20-chance-of-bitcoin-topping-70k-by-april-end-defi-options-marketplace-lyra/

2024-02-16 06:50

The firm's Gold & Silver fund made a $2.58 million investment in an XRP ETP in the first half of 2023, which was later cancelled. The investment in the XRP product was canceled due to crypto investment rules in Ireland. The asset manager had to quickly scrap the investment at a loss of $834. Jupiter Asset Management (JUN), the London-listed firm with assets under management of over $65.8 billion, had to scrap an investment in one of the crypto exchange-traded products (ETP) due to a compliance issue, the FT reported on Friday. Jupiter’s Gold & Silver fund had invested $2.58 million in 21Shares’ Ripple XRP ETP during the first half of 2023. However, the investment was flagged by the company’s “regular oversight process” and was later canceled at a loss of $834, according to the report. The reason for the cancellation is the divergent crypto regulation in Europe. Jupiter’s Gold & Silver fund is domiciled in Ireland, where crypto investments are prohibited for UCITS funds. Other European jurisdictions like Germany allow investment funds to hold crypto. UCITS, or undertaking for collective investment in transferable securities, is a set of rules for investment funds laid out by the European Commission. Jupiter’s crypto investment issue highlights the need for a unified crypto investment framework, even as the start of spot crypto products in the U.S. has fuelled the latest bull run in the crypto markets. Jupiter did not immediately respond to CoinDesk’s request for comment. https://www.coindesk.com/business/2024/02/16/asset-manager-jupiters-crypto-investment-scrapped-by-compliance-team-ft/