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News summary 4/20: Ethereum, Binance, stablecoins, Bitcoin, and Monero

The Merge update will be delayed by a couple of months. Binance announced the Binance Bridge V2 and burned $750 million worth of BNB. USDC and Blackrock are deepening their partnership. Bitcoin’s correlation to stock markets is still high. Monero turns eight – community organizes bank run.

The Merge is postponed by a couple of months

Let’s start with Ethereum-related news. The Merge update has been one of the main topics this spring. It means Ethereum’s move from the Proof of Work consensus to the Proof of Stake consensus. The Merge creates the foundation for the “Ethereum 2.0” ecosystem and allows the blockchain to scale.

We have recently published an in-depth guide about The Merge.

Investors have lately been focused on the schedule of this update. The consensus has been around June-July, but the latest information moves The Merge a couple of months forward. This comes from a tweet made by Ethereum developer Tim Beiko.

It won’t be June, but likely in the few months after. No firm date yet, but we’re definitely in the final chapter of PoW on Ethereum.

There is no exact date set for The Merge and there won’t be one anytime soon. This is because the timing of the update is determined by an increase in the difficulty of mining to a certain level. Beiko tweeted about this as well.

The term difficulty bomb is closely linked to this. It literally describes how the mining difficulty explodes to a level where it is no longer profitable. After the bomb drops, mining becomes more difficult, forcing miners to stop mining. After that, the Proof of Stake validators will take over.

The aforementioned difficulty bomb was due to be dropped in May, but now it too has to be postponed to the future.

Postponing The Merge has not had a significant impact on Ethereum’s price.

Binance Bridge 2.0 and BNB burn

Next, some news about Binance. In case any of you readers don’t already know, it is the leading cryptocurrency exchange on the market. We have an in-depth user guide available for those who want to take a closer look.

Binance has launched the Binance Bridge 2.0. As the name suggests, it is a token bridge between Binance and other blockchains. It is aimed in particular at Ethereum users.

The bridge allows, for example, Ether (ETH) to be transferred to the BNB Chain as a wrapped token. Such tokens are called Btokens. The idea is to enable the use of Ether (as well as other tokens) in DeFi applications on the BNB Chain.

This is how wrapped Bitcoin (WBTC) works as well. It is a wrapped token that follows the Bitcoin price 1:1 on the Ethereum blockchain. This allows Bitcoin to be used as collateral for loans in DeFi applications.

Binance wants to combine the DeFi and the CeFi worlds. The new Binance Bridge will also integrate with the Binance account and the mobile app. You can read more details from this Cointelegraph article.

Binance has also continued its BNB burning program.

Yesterday, 1.84 million BNB tokens with a total value of around $750 million were burned.

Binance burned the BNB token previously on a quarterly basis based on the company’s earnings. Now an automatic burning is performed. The amount depends on the price of the BNB token. Burning continues until half of the 200 million BNB tokens have been destroyed.

There are currently 163 million BNB tokens on the market. So far, the burnings have not had a big impact on the price, as Binance has destroyed mostly tokens that have not been in circulation. According to Coinmarketcap, 98.89% of BNB tokens are currently in circulation.

The BNB Chain was also upgraded at the beginning of 2022 with the BEP-95 update, corresponding to Ethereum’s EIP-1559 update. It will burn part of the transaction fees gained by validators. BNB is now effectively a deflationary currency.

Stablecoin news: USDC, Blackrock and UST

The size of the stablecoin market has exploded in recent years alongside the DeFi market. Just two years ago, the total market cap of stablecoins was less than $10 billion. Today it is over $180 billion.

Tether’s market share has also dropped below 50% in 2022. This is due to the USDC and UST. The first one of these has also recently broken the $50 billion market cap. USDC is already the fifth most valuable cryptocurrency. Only BTC, ETH, BNB, and USDT (Tether) are above it.

Last week, the USDC-backed Circle announced a $400 million funding round.

At the same time, Circle announced a strategic partnership with Blackrock. This is the largest investment company in the world, with $10 trillion of assets under management (AUM). Blackrock will manage an increasing part of USDC reserves too.

An interesting point on this: the USDC’s official blockchain is Solana, although most tokens are still on the Ethereum platform. The popular Coin Bureau channel speculates in its new Solana video that USDC could eventually become the de facto US stablecoin on the Solana platform.

While USDC and USDT dominate the stablecoin market, there is also an interesting threat. Terra’s algorithmic UST stablecoin is currently the fastest-growing stablecoin. Its market value has risen by more than 70% in 2022.

UST reached another new milestone on Monday when it overtook Binance USD in market value. UST now has a market cap of $17.7 billion. The figure was 10.1 billion at the beginning of the year. UST’s popularity is driven by the Terra platform and in particular its Anchor DeFi protocol, which has been paying investors a fixed annual interest rate of 20%.

The Luna Foundation Guard, which is in charge of the development of Terra, has been in the headlines in recent months as it plans to raise an additional $10 billion in Bitcoin reserves for the UST. LFG has already acquired 42530 bitcoins worth over $1.7 billion.

Bitcoin’s correlation to Nasdaq is at a record high

The Bitcoin price discussion has been dominated for the past six months by one topic: correlation with the stock market and especially the Nasdaq, which describes higher-risk technology stocks.

A recent report by Arcane Research shows a correlation of 0.70 between Bitcoin and Nasdaq. The figure ranges between -1 and +1, so we are now at a very high level.

bitcoin vs nasdaq

November 2021 was a clear watershed moment. The DXY (the dollar index), and gold have taken an opposite course compared to Bitcoin & Nasdaq. Not surprisingly, November 2021 is when the Fed announced its plans for raising interest rates.

Stocks and risk assets can also do well in a rising rate environment. This is because interest rates are traditionally raised to calm down an overheated economy. Now the Fed is raising rates because inflation is at a 40-year high. Political pressure, not a hot economy, is driving these rate hikes. In fact, many analysts believe the Fed is actually causing a recession in the U.S. with its actions.

Fed’s plans create strong headwinds for stocks. This includes also cryptocurrencies, which are seen as risk assets by most investors. Interestingly, as interest rates have risen, investors in government bonds have also lost money. Now the U.S. housing market is also at risk of freezing up, as mortgage rates have almost doubled in a short period of time.

Investors’ options are therefore few and far between. Where to get returns in an environment where stocks, interest rates, and real estate are all going down? In addition, inflation is eating away at the purchasing power of cash at a historically high rate.

For thousands of years, gold has served as a safe haven in times of uncertainty. It has proven this also in 2022. Although many are surprised at how little gold has moved in the end. Overall happy investors are hard to find right now!

Unfortunately, there are still no signs of a break in the link between Bitcoin and the stock market. This trend is likely to continue during the summer when markets traditionally slow down a bit.

Monero turned 8 years old

Monero is the best-known privacy coin. This refers to cryptocurrencies that hide the transaction data of the users. The technology used by Monero fully protects transactions on the network, meaning that not only the amount of the transaction is hidden, but also the real address of the recipient.

A few days ago, Monero reached a major milestone. It turned eight years old! This is a respectable age in the world of cryptocurrencies. The day was celebrated with the name Moneroversary.

At the same time, the Monero community tried to organize a bank run called Monerun. The Bitcoin community has organized a similar campaign called Proof of Keys on the birthday of the Bitcoin blockchain.

The idea is to withdraw funds from the exchanges into your own wallet. This is to reveal whether an exchange has lent out users’ funds, basically testing whether it is able to make the payments. As Monero’s blockchain is not transparent like Bitcoin’s, the risk of such activity is higher.

The XMR token price got a small boost from the event, but nothing significant. No major withdrawal problems have been reported.

The Monero community also announced a new hard fork over the weekend. The hard fork, which will be released in July, will improve Monero’s privacy and the efficiency of the blockchain.

Although privacy has been on the agenda in recent years, it is not reflected in the price of private cryptos. They have been slipping down the cryptocurrency rankings year after year. This is probably due to regulation and a poor reputation.

Many cryptocurrency exchanges have removed private cryptos from their listings because of their features. If the sender and recipient cannot be identified, the exchange gets into trouble with money laundering regulations.

The bad reputation is due to the use of private cryptos in so-called ransomware attacks. A recent report shows that Monero’s popularity in this sector is growing. Monero transactions are impossible to track, making it easier for criminals to exchange XMR tokens for fiat currency. In the case of Bitcoin and Ethereum, the open blockchain makes it possible to track the funds, even if the criminal is using so-called mixer services.

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