Summary: China accelerates development of digital currency, and a large exchange experiences record outflows
This week the entire crypto market cap rose by 13%, bringing the market cap to USD 300 bn. Ethereum and Bitcoin rose by 6% and 19% respectively. Bitcoin has finally found room above USD 10k after spending the past few weeks oscillating around the key psychological level.
PBOC pushes digi-yuan
In a meeting this week, the People’s Bank of China announced that it would “accelerate the pace of research and development of China’s legal digital currency.” This is good news for China as a digital yuan could work to accelerate the country's dominate fintech ecosystem. A yuan based on blockchain technology could be used as an additional tool to implement countercyclical measures. A step PBOC is already taking as the trade war heats.
Since the announcement of a US government probe into one of the largest cryptocurrency derivatives exchanges, BitMEX has experienced its largest monthly outflow to date. The exchange suffered a net outflow of roughly USD 525 mn according to data from TokenAnalyst. This record down month comes on the heels of the CME group experiencing record volumes and rival exchange Binance launching margin trading. The crypto derivatives space is quickly becoming overcrowded. However, BitMEX remains the leader in liquidity.
This week Litecoin, experienced its second block reward halving. This is when the reward for mining or securing the network block by block is cut in half per the protocol’s issuance rate. The reward went from 25 litecoins to 12.5 litecoins per block. This supply reduction without the appropriate price change in the token could lead to a reduction in profitability for some miners. These miners would then shut off their machines, and the amount of hashrate securing the network would drop accordingly. However, it appears that a large majority of the miners are still running. This bodes well for the security of the network and gives new investors insight into the much-anticipated Bitcoin halving in 2020.