First Mover: Bitcoin Below $19K and Customers Flee OKEx

December 4, 2020

Everything you need to make sense of the crypto markets and beyond

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By the CoinDesk Markets Team

Edited by Bradley Keoun

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Bitcoin (BTC)

-3.0% $18,879

Ether (ETH)

-4.7% $588

(Price data as of Dec. 4 @12:31 UTC)

TODAY:

Price Point: Bitcoin was lower, sliding back below $19K.

Market Moves: The cryptocurrency exchange OKEx appears to be suffering an outflow of customer assets following an involuntary five-week withdrawal suspension, highlighting the existential threat from operational risk, CoinDesk's Muyao Shen writes.

Bitcoin Watch: Bloomberg's crypto analysts say prices could reach $50K next year, CoinDesk's Omkar Godbole writes.

What's Hot: S&P Dow Jones to launch crypto indexes, Spotify scouts for digital-assets executive, SEC's FinHub becomes standalone office, Pakistan moves to legalize bitcoin, Terra brings 24-hour trading to synthetic versions of stocks like Tesla (TSLA).

Price Point

Bitcoin was lower, pushing prices back down below $19,000 toward where they started the week.

Digital-asset traders have been speculating whether prices would quickly breach $20,000 after the cryptocurrency surged earlier this week to a new all-time high of $19,920. But so far the market hasn't been able to carry through.

"In the short-run, this rally has endured for a good while and prices might need some sideways action or even a quick retracement before rising further," the digital-asset financial firm Diginex wrote Friday.

In traditional markets, Asian and European shares rose and U.S. stock futures pointed to a higher open ahead of a key government report on U.S. employment expected to show slowing jobs growth in November. Gold weakened 0.1% to $1,840 an ounce.

Market Moves

Warning to cryptocurrency exchanges everywhere: Customers aren't too keen about having their deposits involuntarily blocked from withdrawal for five weeks.

A sharp drop in the Malta-based OKEx’s trading volume and stablecoin reserves – tether (USDT) in particular – may reveal an ongoing exodus of users after the popular derivatives exchange unexpectedly halted all crypto withdrawal activities.

The suspension ended on Nov. 26, and data from the analytics service CryptoQuant show that the amount of tether held in OKEx wallets dropped by 98% in less than a week to 6.69 million on Dec. 1. OKEx has a large user base in China, and tether, the world’s largest dollar-backed token, with total assets of $19.35 billion, is one of the most popular stablecoins used by Chinese traders.

Total daily trading volume on OKEx declined significantly during the same time period – down approximately 67.7% from Nov. 25, according to data compiled by CoinDesk. The volume of tether traded on OKEx plunged 70%.

The sudden and significant decline in tether in reserves on OKEx could indicate that users are transferring their stablecoins elsewhere – possibly to a different exchange or to their private cold wallets, according to analysts and traders who spoke with CoinDesk.

“They don’t want to keep assets in OKEx," Darius Sit, of Singapore-based QCP Capital, told CoinDesk.

The amount of USDT reserved on OKEx over the past year (in red), charted versus bitcoin's price (black). (CryptoQuant)

A spokesperson for OKEx said CryptoQuant’s data did not match the firm’s internal records, but OKEx has yet to provide their own figures.

According to OKEx, the suspension of all cryptocurrency withdrawals was due to one of its keyholders being “out of touch” with the exchange after it was “cooperating with a public security bureau in investigations.”

In a recent ask-me-anything (AMA) session, OKEx CEO Jay Hao acknowledged that the freezing of OKEx’s crypto withdrawals was harmful for his company and that as a result, trading volumes had dropped.

“We have seen an understandable decrease in trading activity on the exchange,” Hao said.

- Muyao Shen

Read More: OKEx’s Trading Volumes and Tether Reserve Plunge on Possible User Exodus

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Looking Back, Moving Forward: Crypto’s Most Influential in 2020

Each year since 2014, CoinDesk has identified the crypto community's “most influential” members. The community needed influencers to spread awareness, build confidence and set precedents for the digital currency industry to reach its full potential.

These evangelists broke through all the white noise and ushered in a new wave of enthusiasts into the space. To recognize their contributions, CoinDesk launched its “Most Influential” franchise to highlight individuals who moved the needle.

Over two days on Dec. 7-8, a special CoinDesk Live series looks back to the first list and takes stock of the industry’s progress, and zooms forward to reveal CoinDesks' seventh Most Influential list to recognize the latest pioneers who helped take the industry forward.

Watch CoinDesk Live: Most Influential 2020 on CoinDesk.com, YouTube and Twitter on Dec. 7-8.

Bitcoin Watch

(TradingView/CoinDesk)

Bloomberg analysts expect bitcoin to remain bid next year and possibly rise as high as $50,000 next year."

Bitcoin will maintain its propensity to advance in price into 2021, in our view, with macroeconomic, technical and demand vs. supply indicators supportive of $50,000 target resistance, implying about a $1 trillion market cap," noted Bloomberg Crypto in a monthly report.

The demand-supply mechanics are currently skewed bullish, as only 900 new coins mined each day vs. 1,800 in 2017, and institutional participation is increasing.

While the odds appear stacked in favor of the bulls, the cryptocurrency remains vulnerable to a March-like panic sell-off in the global equity markets, Bloomberg's report said. However, analysts do not see prices falling below $10,000.

- Omkar Godbole

Read More: Bitcoin Price Could Hit $50K in 2021, Bloomberg Analysts Say

Token Watch

Ether (ETH): Coinbase, Binance and OKEx announce "BETH" tokens to give liquidity to users staking ether in Ethereum's new proof-of-stake network.

XRP (XRP): Ripple Chief Technology Officer David Schwartz says company could be forced by validators to burn its 48M XRP tokens.

Aave (LEND): Decentralized money market rolls out second version incorporating collateral swap functionality powered by new flash-loan system.

Wrapped bitcoin (WBTC): "Burns" increase as traders rotate capital out of cooling DeFi.

OMG Network (OMG): Genesis Block Ventures announces acquisition of network, which helps speed transactions and lower fees on the Ethereum blockchain by handling transactions off-chain.

What's Hot

U.S. Securities and Exchange Commission makes fintech hub a standalone office, with Senior Advisor for Digital Assets Valerie Szczepanik continuing at the helm (CoinDesk)

Pakistan moves to legalize bitcoin as economy tumbles (Decrypt)

Swiss wholesale CBDC trail shows "feasibility" for central bank money on distributed ledger, BIS says (CoinDesk)

Lex Sokolin of Consensys argues that community represents the real value in an open-source DeFi project where code can be easily copied and governance tokens now have $3.5 billion of associated enterprise value (CoinDesk Opinion)

The latest CoinDesk Monthly Review compares bitcoin’s November 2020 rally with the asset’s market and network performance three years ago and looks at some metrics on the progress toward the launch of Ethereum 2.0. Download the free CoinDesk Research November 2020 Review.

Analogs

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Disclaimer: The information presented in this message is intended as a news item that provides a brief summary of various events and developments that affect, or that might in the future affect, the value of one or more of the cryptocurrencies described above. The information contained in this message, and any information liked through the items contained herein, is not intended to provide sufficient information to form the basis for an investment decision. The information presented herein is accurate only as of its date, and it was not prepared by a research analyst or other investment professional. You should seek additional information regarding the merits and risks of investing in any cryptocurrency before deciding to purchase or sell any such instruments.

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