• Realized price is an on-chain metric used to determine market movements in bear and bull markets.
• Long-term holders (LTHs) and short-term holders (STHs) are the two primary groups driving the market.
• The LTH-STH cost basis ratio can illustrate how the market dynamic is shifting and how STHs or LTHs are buying/selling their BTC.
Realized Price: An On-Chain Metric
Realized price is a metric often used to determine market movements in bear and bull markets. Defined as the value of all Bitcoins at the price they were bought divided by the number of circulating coins, realized price effectively shows the cost-basis of the network.
Long Term & Short Term Holders
Dividing the network into cohorts can help us reflect the aggregate cost basis for each major group owning Bitcoin. Long-term holders (LTHs) and short-term holders (STHs) are the two primary cohorts driving the market — LTHs are all addresses that held BTC for longer than 155 days, while STHs are addresses that held onto BTC for less than 155 days.
The LTH-STH Cost Basis Ratio
The LTH-STH cost basis ratio is the ratio between the realized price for long-term and short-term holders. Given the historically different behaviors LTHs and STHs exhibit, this ratio can show how STHs or LTHs are buying/selling their BTC and illustrate how market dynamics might be shifting during different phases of a bear or bull market.
Uptrend in Cost Basis Ratio
An uptrend in this ratio is seen when STHs realize more losses than LTHS, which indicates a bear market accumulation phase led by LTHS. A downtrend in this ratio indicates that LTHS spend coins faster than STHS, which shows a bull market distribution phase where long term holders sell off their coins for profit, which STHS buy up.
Cost Basis Ratio Higher Than 1
A cost basis higher than 1 suggests late stage bear capitulations turning into bull runs – when short term holders accumulate more losses than long term ones, it implies that long term investors have been accumulating Bitcoin throughout a bearish period and now feel confident enough to take profits as prices start rising again during a bullish cycle.
• Recent enforcement actions have caused many to believe that the SEC is determined to hinder the US crypto industry.
• Jeff Zelkowitz, Executive Vice President at APCO Worldwide, believes there is appetite and willingness among U.S. lawmakers to make progress in the cryptocurrency regulatory space.
• The lack of a unified framework has led to oversight by various state and federal financial regulators with existing legislation, creating an overlap between different regulators.
US Crypto Regulation on Track Despite Recent SEC Enforcement Actions
Appetite and Willingness Among Lawmakers To Make Progress
Recent enforcement actions against Kraken and Paxos have caused many to believe that the SEC is determined to hinder the US crypto industry. However, Jeff Zelkowitz, Executive Vice President at APCO Worldwide, believes there is appetite and willingness among U.S. lawmakers to make progress in this space.
Lack of Unified Framework Creates Regulatory Overlap
The lack of a unified framework has led to oversight by various state and federal financial regulators with existing legislation, creating an overlap between different regulators. This method cannot appropriately capture all the nuances of cryptocurrencies or tackle bad actors effectively which has been highlighted as a key criticism of US crypto regulation approach.
White House’s Executive Order & Senators Gillibrand & Moran’s Stablecoin Act
In order to rectify this issue, recent efforts made include White House’s Executive Order as well as Senators Gillibrand & Moran’s Stablecoin Act which aims to bring clarity and consistency in regards to digital asset regulations across all states in United States.
CoinMarketCap 2023 Crypto Playbook Overview
CoinMarketCap’s 2023 Crypto Playbook overviewed what may lie ahead for various sectors such as DeFi (decentralized finance) and user adoption according to leading figures in the space while also providing insight into US regulatory outlook from Jeff Zelkowitz himself.
U.S cryptocurrency regulation still has a long road ahead but it appears that congressional members are making concerted efforts towards achieving a balanced solution between reinforcing American leadership in global financial system while also tackling bad actors operating within this space effectively
• Binance’s Asia-Pacific head Leon Foong says that a full audit of the exchange’s reserves will take a while due to the crypto learning curve of big accounting firms.
• The first Bitcoin PoR report was published with auditing firm Mazars, but they have since announced they will no longer be working with crypto clients globally.
• Binance is now working to separate its collateral from customer funds and publish a more comprehensive proof of reserve statement.
Binance’s Reserve Audit Delayed
Binance Asia-Pacific head Leon Foong recently told Bloomberg News that a full audit of the exchange’s reserves may be „some way off“ due to the difficulty traditional accounting firms face in understanding the cryptocurrency sector. This comes after Mazars, who Binance previously worked with for their first Bitcoin proof of reserve (PoR) report, announced they would stop working with crypto clients globally.
Challenges for Accounting Firms
Foong explained that the challenge for traditional accounting firms is twofold: one being that it isn’t their core competence and two being that there is much scrutiny if they get it wrong. He also noted that these firms lack agreed standards when it comes to challenges such as price volatility within the crypto market.
Separating Customer Funds
In light of this, Binance is now working to separate its collateral from customer funds and publish a more comprehensive proof of reserve statement. The first reserve report was criticized for not including liabilities alongside assets; however, CEO Changpen Zhao clarified that there were no outstanding loans and auditing liabilities was harder than expected.
Big Accounting Firms Learning Curve
Despite this setback, Foong still believes that a full audit can happen eventually once big accountancy firms have learned enough about cryptocurrencies to do so effectively and accurately without risking mistakes or scrutiny from investors or regulators alike.
In conclusion, Binance’s audit delay highlights some unique challenges faced by traditional accounting firms when dealing with cryptos due to lack of agreed standards, as well as difficulties in assessing liabilities and separating customer funds from collateral reserves. However, once these issues are addressed through better education on cryptos by major accountancy firms, we can expect Binance to move forward with their audit plans in order to provide greater transparency into their operations..
• Squid, a cross-chain routing protocol powered by Axelar, has raised $3.5 million to build native-to-native cross-chain token swaps.
• The protocol will enable developers on 25 blockchains to swap tokens across chains natively and securely.
• Squid’s DEX will allow any user across 25 chains to swap native tokens with one click and leverage Axelar to purchase NFTs with assets from any blockchain.
Cross-Chain Token Swaps Enabled by Squid
Axelar powered protocol, Squid, has closed a $3.5 million seed round to bring native cross-chain swaps to EVM and Cosmos ecosystems. The technology enables developers on 25 blockchains to swap tokens across chains natively and secure them in an interoperable manner.
One Click Native Token Swaps
Squid’s DEX will allow any user across 25 chains to swap native tokens with one click. Its developer tools are provided as an „API and SDK alongside an easily implementable and customizable widget.“ This feature allows users to transact without the need for wrapped assets or confusing bridge UX which can be time consuming and expensive.
Secure Cross-Chain Swapping
Outside of centralized exchanges, options for cross-chain swaps are limited; however, some protocols do offer this service such as THORChain which processes a daily swap volume of around $20 million through its RUNE token paired liquidity pools. With Squid’s launch of mainnet support for 25 blockchains including EVM and Cosmos ecosystems, users can now move their tokens securely in an interoperable manner between multiple networks with just one click.
Purchasing NFTs Across Blockchains
In addition, the platform leverages Axelar technology so that users can purchase NFTs with assets from any blockchain supported by Squid as well as convert integrated wallets into „chain agnostic“ wallets – allowing access across multiple networks all at once.
By leveraging the power of both Squid’s DEX technology as well as Axelar messaging network, users are able to move their tokens securely between multiple networks while also being able to purchase NFTs using assets from any supported blockchain – all within just one click!
• Several U.S. senators are seeking new details from Silvergate Capital about its knowledge of FTX’s wrongdoing.
• The group of senators asked Silvergate to disclose whether it was aware that FTX instructed users to wire funds to Alameda’s account at Silvergate and whether it flagged any suspicious transactions. They also asked about due diligence and external reviews/audits.
• Silvergate has until Feb 13 to respond, but there is no known consequence for failure to do so.
Senators Seek New Details on Silvergate Ties to FTX
Several U.S. Senators, including noted cryptocurrency critic Elizabeth Warren (D-Mass.) as well as Roger Marshall (R-Kan.) and John Kennedy (R-La.), are seeking new details from Silvergate Capital about its knowledge of FTX’s wrongdoing, according to a Jan. 31 report from Bloomberg.
Questions Asked About FTX Instructed Users
The group of senators asked Silvergate to disclose whether it was aware that FTX instructed users to wire funds to Alameda’s account at Silvergate — an instance of fund mismanagement that was first reported last November — and whether it flagged any suspicious transactions. Furthermore, they asked about the due diligence process and the results of external reviews and audits conducted by the company.
Silvergate Obtained $4 Billion Loan After Collapse
The same senators noted that following the collapse in late 2022, Silvergate obtained a $4 billion loan from the Federal Home Loan Bank — a government sponsored banking system — which they used as a lender of last resort. The group of senators asked how this loan will be used by them in the future.
December Letter Revealed Relationship Predated Founding
The letter follows another one sent in December, where although citing confidentiality rules, revealed that their relationship with Alameda Research predated FTX’s founding and were reviewing transactions related to both firms while also conducting due diligence on their clients—a statement made public earlier that month too.
Silvergate Has Until Feb 13 To Respond
Silveragate has until Feb 13th 2021 to respond fully or face unknown consequences; however they have not provided any further information on what those consequences may be if they fail to do so before then