Investments

Coinsquare acquires publicly traded crypto exchange CoinSmart

CoinSmart reported $16.7 million in gross revenue in 2021 as retail trading volumes soared during the Bitcoin bull market.

Canada’s crypto exchange landscape appears to be consolidating after Coinsquare, one of the largest digital asset trading platforms in the country, acquired CoinSmart for an undisclosed amount. 

On Thursday, Coinsquare announced that it had entered into a definitive agreement to purchase all issued and outstanding shares of CoinSmart’s wholly-owned subsidiary Simply Digital. Once the deal becomes final, CoinSmart will hold a roughly 12% ownership stake in Coinsquare on a pro-forma basis.

Shares of the CoinSmart crypto exchange, which trade on the NEO Exchange, were up 67% on Friday, largely in response to the news.

The acquisition makes Coinsquare one of Canada’s largest crypto exchanges and expands its operational and business capabilities. Founded in 2014, Coinsquare has expanded its service offerings to include retail and institutional trading, crypto payment processing and digital asset custody.

CoinSmart was co-founded in 2018 by Justin Hartzman, who also served as the company’s CEO. Following the acquisition, Hartzman is set to join Coinsquare’s executive team.

As a publicly traded company, CoinSmart discloses its financial statements quarterly. In its annual summary released on April 1, the company reported $16.7 million in gross revenue in 2021, an increase of 357% year-over-year. Retail trading volume grew by 875%, likely reflecting the Bitcoin (BTC) bull market of 2021.

Related: Canada’s new opposition leader is a Bitcoiner

Coinsquare is one of just two crypto exchanges operating in Canada to pre-register with their principal regulators as they work toward full compliance with securities laws. The pre-registration requirements were established by the Canadian Securities Administrators, or CSA, and allow crypto exchanges to remain operational while their full applications with CSA are being reviewed.

In an interview with Cointelegraph on the sidelines of the Futurist conference in Toronto in August, Coinsquare chief operating officer Eric Richmond explained that the crypto exchange registered with the Investment Industry Regulatory Organization of Canada, or IIROC, in November 2020.

Crypto adoption in Canada is on the rise, but like in other countries, participation is largely based on underlying market conditions. According to a KPMG survey, adoption is also growing within institutional circles due to crypto’s perceived upside and innovative potential. 

GEM Digital commits $50M to ParallelChain Lab for L1 protocol development

As a proof-of-stake layer-1 protocol, ParallelChain intends to deliver an architecture that operates in confidentiality while allowing to validate transactions.

Digital asset investment firm GEM Digital Limited (GEM) has committed $50 million to finance ParallelChain Lab following the launch of its mainnet and native token listing, XPLL, in Q4 2022.

As a proof-of-stake (PoS) layer-1 protocol, ParallelChain aims to bridge the infrastructure divide between centralized fi(CeFi) and decentralized finance (DeFi). The soon-to-be-launched ParallelChain mainnet is open source and based on a PoS consensus mechanism dedicated to maintaining a fair distribution of power.

The permissioned ParallelChain Enterprise, on the other hand, will ensure the secrecy of transactions using a patented proof-of-immutability mechanism. The two platforms, together, intend to deliver an architecture that operates in confidentiality while allowing to validate transactions. Speaking about the innovation, ParallelChain CEO Ian Huang stated:

“We see this solution as the answer to enterprises’ privacy and compliance demands while simultaneously addressing the need for scalability across many public applications, namely DeFi.”

GEM’s $50 million investment in ParallelChain is planned to be redirected to market expansion, community development, research and development and funding of decentralized projects and decentralized app (DApp) developers.

Related: Sports metaverse company secures $200M funding

Showcasing the diverse interest of crypto investors, institutional crypto lending protocol Maple Finance announced its commitment of up to $300 million in secured debt financing to public and private Bitcoin (BTC) mining firms.

Mining firms from North America and Australia that meet the treasury management and power strategies standards are eligible to apply for the funding. Sidney Powell, CEO and co-founder of Maple Finance, highlighted the recent pullback from lenders, adding that:

“Miners play an essential role in growing the crypto ecosystem and local economies, and we are proud to extend a new financing vehicle to direct capital where it is needed the most.”

As Cointelegraph reported, Maple currently holds 50% of the institutional crypto lending market as measured by total loans outstanding.

Blurring the line between crypto and TradFi could redefine global finance

The merging of crypto and TradFi is inevitable, with the latter potentially mitigating the volatility permeating the digital asset industry.

Despite the current struggle in the global economy, the gap between traditional finance (TradFi) and crypto seems to be closing with each passing day. 

For example, earlier this month, Vienna-based fintech unicorn Bitpanda announced that it was adding commodities to its list of investment options, thus allowing investors to rake in profits from short-term price fluctuations related to traditional instruments such as oil, natural gas and wheat.

In a recent interview with Cointelegraph, the company’s CEO, Eric Demuth, noted that the bear market had had no major impact on investor demand. He claims that more people are now looking for solutions that can bring the world of TradFi and decentralized finance (DeFi) together.

Not only that, there are lessons to be learned about what works out best for consumers operating within both realms. For example, while TradFi platforms can improve their accessibility and transparency mechanisms, DeFi ecosystems can learn a lot about risk mitigation from traditional finance entities.

Furthermore, with statistical data showing that more than 300 million individuals now own some cryptocurrency, more and more players from the two worlds are beginning to arrive at a middle ground. For example, many major institutions worldwide have been adopting crypto at breakneck speeds, with a recent research study showing that 76% of all major financial institutions will most likely be making use of digital assets within the next 36 months.

Is the confluence of TradFi and crypto imminent?

According to Victor Tran, co-founder and CEO of Kyber Network — a liquidity hub powering the Ethereum-based decentralized exchange (DEX) KyberSwap — it is only logical that traditional finance players are turning toward crypto since they want to increase their market share within an exponentially growing industry — one that has been witnessing more and more peer-to-peer and commercial transactions by the day. 

By the same token, he highlighted that DeFi, too, is experimenting with more use cases, those that can maximize market participation as well as help boost transaction volumes, adding:

“It’s all about giving users benefits. We believe that TradFi and DeFi can co-exist synergistically and provide users unparalleled access, control and choice. Greater institutional participation, security measures and use cases will create choice, excitement and confidence for users. Sustainable overall liquidity in the market with institutional participation will also help with the challenges of volatile liquidity during downturns.”

Furthermore, Tran believes that privacy-focused noncustodial solutions will become mainstream soon, with multichain, secure DEXs such as KyberSwap laying the bedrock for such a transparency-oriented economy. “Addressing users’ security wants, and pain points are always first priority,” he concluded.

Jazear Brooks, CEO and founder of omnichain DEX SifChain, shared a somewhat similar opinion, telling Cointelegraph that crypto and TradFi markets have been circling each other for the past few years, with many individuals from the latter having already joined the digital currency bandwagon after realizing that the best crypto projects can massively out-earn almost all of their conventional finance counterparts. He added:

“The chaos of crypto markets due to the collective inexperience of the industry reflects a world of pitfalls that have already been mastered by TradFi. TradFi is the elder statesman in the room representing timeless virtues of profitable investing in an unpredictable world.”

Brooks closed out by saying that the protective mechanisms of corporate governance can be combined with the populist, fast-paced, communal benefits of decentralized autonomous organizations to create a holistic finance system, one that is fair, transparent and inclusive in nature. “We’ll see market efficiencies increased as trad-fi systems are reimagined to import crypto values, and those market efficiencies can then generate additional societal value,” he opined. 

Crypto and TradFi stand to benefit each other

Nicola Onassis, co-founder and CEO of regulated investment platform Rebuschain, told Cointelegraph that the integration of crypto into TradFi — and vice versa — can be seen as the natural evolution for both environments, especially as the two domains stand to help each other. In his view, DeFi has created new investment opportunities that don’t exist within traditional markets, allowing more people to accrue wealth for themselves, adding:

“The crypto sector can sometimes be hard to make inroads into, especially for those sitting on the fence. That’s why it is vital for platforms to be created that allow users to participate in these novel investment forms with ease. The goal on both sides is to generate more revenue and investments by working together, they have a chance to increase that outcome exponentially since there is no conflict.” 

He further highlighted that, as things stand, investors unfamiliar with the crypto market have to deal with platforms that can often be difficult to use. However, everyone can benefit immensely by bringing players from the traditional realm and fostering new ecosystems that provide a more user-friendly experience. “Having a platform that takes out all of the operational complexities and minimizes risks will increase confidence and adoption,” Onassis stated.

Lastly, he thinks that it is important that regulators allow crypto and TradFi to come together and create viable solutions for their customers instead of complicating things by introducing unnecessary regulations. “Regulators giving fair, specific and clear rules can push the crypto sector forward. The crypto industry should work with regulators to achieve these results,” he said.

Could this reduce market volatility?

Maximiliano Stochyk, head of marketing for ChainPort — a permissionless blockchain bridge for crypto tokens — told Cointelegraph that the confluence of crypto and traditional finance will not only allow non-tech savvy investors to make their way into the crypto sector but also introduce a level of stability previously unwitnessed in the digital asset space.

He noted the already growing list of mainstream financial institutions that are offering their clients the option of buying crypto using their fiat assets, among other similar options. “The fintechs that offer debit cards are also acting as major gateways to mass adoption,” Stochyk stated.

Stochyk said that for mass crypto adoption to happen in the near-to-mid-term, the two spaces need to coexist with one another. And much like Onassis, he also believes that regulation is right around the corner, with companies now needing to act accordingly to help introduce more confidence within this space:

“Building products that are ready to comply with regulations is the way to go. The merging of crypto and TradFi will bring a lot of new institutional investors and also a lot of retail investors who don’t want to invest in crypto. When it comes to centralized and decentralized, you can’t live without the other, you will always need a centralized exchange to withdraw money to your bank for example. So, they all need to coexist.”

Therefore, as the world continues to gravitate toward an economic landscape that favors the ethos of decentralization/transparency, it will be interesting to see how players from the crypto and conventional finance ecosystems continue to synthesize their goals and create a new paradigm that allows users to enjoy the best of both worlds.

Roth IRAs: The ideal long-term cryptocurrency investment?

Considering investing in cryptocurrencies for the long run? Roth IRAs and other tax advantages investment vehicles are worth considering.

As the cryptocurrency market matures, more governments throughout the world introduce legislation to tax proceeds from crypto-related activities, with traders often triggering taxable events that can lead to future complications.

Avoiding paying taxes is illegal, but there are legal ways to dodge triggering taxable events while hodling onto one’s cryptocurrency holdings: Roth IRAs. These are individual retirement accounts (IRAs) with a special type of tax-advantaged system.

Using IRAs to avoid triggering taxable events with cryptocurrency investments is a strategy that has been considered for some time, with North American mining and hosting firm Compass Mining offering a solution for BTC users to mine directly to their IRAs last year.

Before diving deeper, it’s important to point out that Roth IRAs are only available in the United States, although other countries often have their own form of tax-advantaged investment vehicles. Often, stocks with significant exposure to Bitcoin — such as MicroStrategy — have to be used as a proxy for some of these vehicles.

What are Roth IRAs?

A Roth IRA is a type of individual retirement account to which investors contribute after-tax earnings. What makes Roth IRAs stand out is that what investors place in these savings accounts can grow tax-free and be withdrawn without any other taxes being owed after they’re aged 59 ½, if the account has been open for at least five years. 

Essentially, a Roth IRA considers that since taxes have been paid on the funds being contributed into the account, investors do not need to pay any further tax as long as they meet the specific conditions outlined above.

Roth IRAs can be funded in various ways beyond regular contributions, which have to be made in cash. Assets permitted into Roth IRA accounts include stocks, exchange-traded funds, money market funds, bonds, mutual funds and cryptocurrencies.

The Internal Revenue Service (IRS) does not allow for direct cryptocurrency contributions into these accounts, but these are various Bitcoin IRA solutions that are designed for investors to save cryptocurrencies in these accounts. It’s worth pointing out that yearly contributions to Roth IRAs are limited based on IRS specifications and that investors can keep Roth IRAs as long as they please, as there are no required minimum distributions.

Is it a good idea to add crypto to a Roth IRA?

Cryptocurrencies are known for being extremely volatile, which means they aren’t for every investor out there. More conservative investors will likely be happier holding bonds, mutual funds and exchange-traded funds, while investors with a larger risk appetite may consider allocating to crypto.

The growth potential of cryptocurrency holdings in a portfolio is enough to lure in investors who believe cryptocurrencies will keep on growing in popularity as the infrastructure around them boosts accessibility and new crypto-related products and services are created. This growth potential, it’s worth pointing out, comes with heightened risk.

As tax-free withdrawals from Roth IRAs require accounts to be at least five years old, cryptocurrency investors looking to take advantage of them should always be prepared to hold onto their funds for a long time.

Chris Kline, co-founder of cryptocurrency IRA platform Bitcoin IRA, told Cointelegraph that there are no tax benefits on contributions to Roth IRA accounts, but there are tax benefits on distributions:

“If you have a longer time horizon in Bitcoin and crypto, a Roth IRA could be an appealing choice for those looking to take advantage of the long-term promise digital assets offer.”

To Kline, cryptocurrencies are going to “disrupt the very fabric of our everyday lives in ways like the internet disrupted communication and email disrupted the post office.” The co-founder of Bitcoin IRA added that while real estate and gold were premier examples of diversification in the past, crypto has “asserted itself as an alternative in the modern economy.”

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Kline added that cryptocurrencies can offer an “alternative path forward for people of all ages” and that there’s been a surge in interest in investing in crypto assets for diversification.

Kunal Sawhney, CEO of equity research firm Kalkine Group, seems to disagree with Kline’s approach. Speaking to Cointelegraph, Sawhney said that if a person has “spent time and labour to earn money, it should ideally not go into extremely risky assets like cryptocurrencies.”

Otherwise, he added, it “defeats the idea of investing for retirement.” Sawhney cautioned that cryptocurrencies aren’t just Bitcoin (BTC) and that betting on these increases the risk that investors fall prey to Ponzi schemes.

As an investment category, he said, cryptocurrencies “might not be so bad” as these assets may become the “biggest contributor to the overall amount in the Roth IRA when the contributor retires and plans to withdraw.” Once again, their potential outsized performance is weighed against their risk.

For long-term investors expecting these outsized returns, placing cryptocurrencies in a Roth IRA lets them realize their capital gains without getting taxed, although they’ll have to stomach the ups and downs for a while.

Portfolio diversification

The extreme volatility of cryptocurrencies makes them a not-so-easy investment when talking about retirement, with the jury being out on whether including cryptocurrencies in a 401(k) retirement plan is sound financial planning or gambling with the future.

To Sawhney, investors need to have a pre-determined strategy for their Roth IRA. The CEO noted that a 60/40 portfolio, with greater exposure to stocks than to bonds, was “long considered balanced and financially rewarding” but suggested cryptocurrencies are changing things:

“Now that there is an option available to hold relatively the most volatile asset, cryptocurrency, a new strategy, say 50/40/10, might be considered. Here 10% could go to the new asset class comprising cryptos. Investors should have the option to change the allocation share per their risk appetite.”

Recent: Does the Ethereum Merge offer a new destination for institutional investors?

Due diligence, Sawhney concluded, is crucial as Roth IRAs are often “viewed as one of the best investment vehicles for young and low-income earners.”

Speaking to Cointelegraph, Kevin Maloney, interim CEO at crypto retirement account provider iTrustCapital, said that volatility is actually “one of the main reasons why many investors prefer using a Roth IRA or any other type of IRA to invest in crypto.” He added that even day-traders could benefit:

“For those who want to ‘day-trade’ due to the volatility of crypto, an IRA still represents a solid option because they won’t be paying yearly taxes on their gains so long as they aren’t taking distributions.”

Whether investors are looking to add cryptocurrencies to their Roth IRA accounts, it’s important note that crypto assets are only available for these accounts through custodians, which may charge hefty trading fees.

It’s up to every investor to analyze what type of investment vehicle best suits their situation and risk appetite. Roth IRAs may be extremely beneficial for long-term investors, as, since 2014, the IRS has taxed cryptocurrencies as property, and capital gains taxes can be owed on depreciated assets.

The views and opinions expressed do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

NFTs will bring crypto to billions of users, explains VC investor

The CEO and co-founder of Electric Capital, Avichal Garg, shares his views on the projects that will explode in the next bull cycle.

Avichal Garg, the CEO and co-founder of Electric Capital, defines himself as “an NFT maximalist,” who believes that nonfungible tokens (NFTs) will play an essential role in bringing crypto to the masses. Unlike other crypto niches, NFTs are relatable to aspects of everyday life such as art, music and games. 

“I could imagine that NFTs are actually many billions of people because it’s ultimately culture. And that’s something that everybody can participate in and everybody can understand,” said Garg in an exclusive interview with Cointelegraph. 

In particular, Garg is bullish about NFTs being used in the gaming industry, which he sees growing at an exponential pace.

“In 18-24 months from now, I think we’re just going to see this onslaught of (NFT-based) games,” he said. 

Garg believes the bear market could last as long as the macro picture is dominated by high inflation, which means it could take another year or two before we’ll see the next bull cycle. Still, when he looks beyond the current macroeconomic picture, at a 10-year time horizon, he feels extremely bullish on the crypto industry. 

“Interest rates and inflation dominate in the short term when you’re talking about a 2-3 year time horizon. But innovation is the one that dominates in the long term,” he pointed out. 

Watch the full interview on our YouTube channel and don’t forget to subscribe!

Influential celebrities who joined the crypto club over the past year

Despite the prolonged bear market and an evident dip in cryptocurrency prices, celebrities continue to pour in support for the crypto market.

The inclusive crypto ecosystem has become home to numerous A-list celebrities over the years — primarily driven by the nonfungible tokens (NFT) hype of 2021. However, despite the prolonged bear market and an evident dip in cryptocurrency prices, celebrities continue to pour in support for the crypto market. 

Over the past year, celebrities have started exploring sub-ecosystems beyond NFTs, trying to diversify their presence across trading, gaming and other investment avenues. In this light, here’s an overview of some of the most influential celebrities who got into crypto over the past year and how well-prepared they are for the next bull run.

Connor McGregor partners with Tiger.Trade

UFC superstar Connor McGregor, one of the highest-paid athletes, recently partnered with Tiger.Trade, a crypto trading application. A part of the deal involves McGregor featuring in an in-house game that users can play to win exclusive prizes.

Prior to signing as an ambassador for Tiger.Trade, McGregor’s involvement in crypto has been indirect via UFC partnerships with Crypto.com, wherein bonuses were paid to the fighters in cryptocurrencies.

The recent game launch, while well-received by fans for its graphics and prizes, was also subject to criticism related to the lack of story. Unlike the majority of top UFC fighters, McGregor has not linked his name with now-defunct NFT projects and continues to maintain secrecy around his investment choices in cryptocurrency.

Eminem purchases Bored Ape NFT for $460,000

Marshall Mathers, otherwise known as Eminem, is one of the rare celebrities to make headlines for investing in NFT rather than trying to sell their collections. The fifteen-time Grammy winner purchased Bored Ape Yacht Club (BAYC) EminApe NFT for $460,000, which depicts a gold chain necklace and khaki army cap that Eminem wears in real life.

Eminem’s connection with crypto dates back to 2018 when the rapper mentioned Bitcoin (BTC) in his newly released album Kamikaze. However, the subsequent NFT purchase established his interest in crypto investments. In June 2022, Eminem released a BAYC NFT-themed music video featuring rap legend and fellow crypto enthusiast Snoop Dogg.

While Eminem hasn’t publicly shared affinity toward any particular crypto asset for investments, the rapper continues to collaborate with BAYC for live performances.

Maria Sharapova became a strategic investor in Moonpay

Tennis legend Maria Sharapova, along with other A-list celebrities such as Gal Gadot, Bruce Willis and Justin Beiber, invested in crypto payment solution MoonPay. The company revealed that more than 60 public figures and celebrities in the music, sports, media and entertainment industries joined hands to invest $87 million in a Series A funding from November 2021.

The investment marked Sharapova’s entry into the crypto world. However, the superstar is yet to reveal her plans for investments in crypto assets.

Snoop Dogg: The face of Web3 and NFTs

Snoop Dogg’s position as an OG stands true in the world of crypto considering his proactive involvement in the space for many years. Snoop’s first interaction with the crypto community started off with him warning against impersonators marketing fake Snoop Dogg-branded tokens and NFTs.

After acquiring knowledge about the industry, the rapper collaborated with numerous crypto projects, including crypto exchanges, Web3, games and NFTs, effectively catalyzing the mainstream adoption of crypto.

Most recently, Snoop Dogg announced the launch of a new restaurant in Los Angeles, inspired by BAYC NFTs, named Bored and Hungry. Despite the dimming down of the hype around NFTs, the smoke king continues to show love for the ecosystem.

Floyd Mayweather makes a crypto comeback

Legendary boxing champion Floyd Mayweather marked his entry into the cryptoverse in 2018, promoting a high-profile crypto scam called Centra Tech. Legal implications of promoting unvetted crypto projects required Mayweather and co-promoter DJ Khaled to pay fines of $600,000 and $150,000, respectively.

Learning from his previous mistakes, Mayweather launched a new NFT project, Mayweverse, consisting of a collection of 5,000 NFTs. The boxer’s track record in being involved with projects that have rug-pulled investors has left his fans and the general public with mixed feelings about the new crypto project.

Matt Damon opts for philanthropy via crypto donations

Hollywood superstar Matt Damon received $1 million in donations from crypto exchange Crypto.com for Water.org, a clean-water initiative co-founded by Damon and Gary White in 2009. As part of the deal, Crypto.com recommended its user base chip in for the cause.

Matt Damon starring in Crypto.com commercial. Source: YouTube

Although Damon hasn’t disclosed his crypto investments, his participation in a Cypto.com commercial attracted criticism from a majority of the crypto community. Investors retaliated against Damon’s suggestion of “Fortune favors the brave,” as the bear market resulted in massive losses across the industry.

Related: Celebrity NFT brands: How celebrities can advance the NFT space

Going against the rising trend of celebrity-backed NFT projects, consumer watchdog group Truth in Advertising (TINA.org) called out 19 celebrities promoting NFTs without disclosing their connection to the projects.

The nonprofit consumer advocacy company revealed its intent to investigate celebrities who promote “deceptive” crypto investments. The website states:

“The promoter often fails to disclose material connection to the endorsed NFT company.”

Responding to TINA.org’s letters related to the promotion of NFTs on their social media accounts without disclosing their connection to the projects, Justin Bieber’s legal team responded by denying any wrongdoing. However, the team confirmed to update the posts on social media.

Influential celebrities that joined the crypto club over the past year

Despite the prolonged bear market and an evident dip in cryptocurrency prices, celebrities continue to pour in support for the crypto market.

The inclusive crypto ecosystem has become home to numerous A-list celebrities over the years — primarily driven by the nonfungible tokens (NFT) hype of 2021. However, despite the prolonged bear market and an evident dip in cryptocurrency prices, celebrities continue to pour in support for the crypto market. 

Over the past year, celebrities have started exploring sub-ecosystems beyond NFTs, trying to diversify their presence across trading, gaming and other investment avenues. In this light, here’s an overview of some of the most influential celebrities that got into crypto over the past year and how well-prepared they are for the next bull run.

Connor McGregor partners with Tiger.Trade

UFC superstar Connor McGregor, one of the highest-paid athletes, recently partnered with Tiger.Trade, a crypto trading app. A part of the deal involves McGregor featuring in an in-house game that users can play to win exclusive prizes.

Prior to signing as an ambassador for Tiger.Trade, McGregor’s involvement in crypto has been indirect via UFC partnerships with Crypto.com, wherein bonuses were paid to the fighters in cryptocurrencies.

The recent game launch, while well-received by fans for its graphics and prizes, was also subject to criticism related to the lack of story. Unlike the majority of top UFC fighters, McGregor has not linked his name with now-defunct NFT projects and continues to maintain secrecy around his investment choices in cryptocurrency.

Eminem purchases Bored Ape NFT for $460,000

Marshall Mathers, aka Eminem, is one of the rare celebrities to make headlines for investing in NFT rather than trying to sell their collections. The fifteen-time Grammy winner purchased Bored Ape ‘EminApe’ NFT for $460,000, which depicts a gold chain necklace and khaki army cap that Eminem wears in real life.

Eminem’s connection with crypto dates back to 2018, when the rapper mentioned Bitcoin (BTC) in his newly released album Kamikaze. However, the subsequent NFT purchase established his interest in crypto investments. In June 2022, Eminem released a Bored Ape Yacht Club (BAYC) NFT-themed music video featuring rap legend and fellow crypto enthusiast Snoop Dogg.

While Eminem hasn’t publicly shared affinity toward any particular crypto asset for investments, the rapper continues to collaborate with BAYC for live performances.

Maria Sharapova became a strategic investor in Moonpay

Tennis legend Maria Sharapova, along with other A-list celebrities such as Gal Gadot, Bruce Willis and Justin Beiber, invested in crypto payment solution, Moonpay. The company revealed that more than 60 public figures and celebrities in the music, sports, media and entertainment industries joined hands to invest $87 million in a Series A funding from November 2021.

The investment marked Sharapova’s entry into the crypto world. However, the superstar is yet to reveal her plans for investments in crypto assets.

Snoop Dogg: The face of Web3 and NFTs

Snoop Dogg position as an OG stands true in the world of crypto considering his proactive involvement in the space for many years. Snoop’s first interaction with the crypto community started off with him warning against impersonators marketing fake Snoop Dogg-branded tokens and NFTs.

After acquiring knowledge about the industry, the rapper collaborated with numerous crypto projects, including crypto exchanges, Web3, games, and NFTs, effectively catalyzing the mainstream adoption of crypto.

Most recently, Snoop Dogg announced the launch of a new restaurant in Los Angeles inspired by BAYC NFTs, named Bored and Hungry. Despite the dimming down of the hype around NFTs, the smoke king continues to show love for the ecosystem.

Floyd Mayweather makes a crypto comeback

Legendary boxing champion Floyd Mayweather marked his entry into the cryptoverse in 2018, promoting a high-profile crypto scam called Centra Tech. Legal implications of promoting unvetted crypto projects required Mayweather and co-promoter DJ Khaled to pay fines of $600,000 and $150,000, respectively.

Learning from his previous mistakes, Mayweather launched a new NFT project Mayweverse — consisting of a collection of 5,000 NFTs. The boxer’s track record in being involved with projects that have rug-pulled investors has left his fans and the general public with mixed feelings about the new crypto project.

Matt Damon opts for philanthropy via crypto donations

Hollywood superstar Matt Damon received $1 million in donations from crypto exchange Crypto.com for Water.org, a clean-water initiative co-founded by Damon and Gary White in 2009. As part of the deal, Crypto.com recommended its user base chip in for the cause.

Matt Damon starring in Crypto.com commercial. Source: YouTube

Although Damon hasn’t disclosed his crypto investments, his participation in a Cypto.com commercial attracted criticism from a majority of the crypto community. Investors retaliated against Damon’s suggestion of “Fortune favors the brave” as the bear market resulted in massive losses across the industry.

Related: Celebrity NFT brands: How celebrities can advance the NFT space

Going against the rising trend of celebrity-backed NFT projects, consumer watchdog group Truth in Advertising (TINA.org) called out 19 celebrities promoting NFTs without disclosing their connection to the projects.

The non-profit consumer advocacy company revealed its intent to investigate celebrities that promote “deceptive” crypto investments. The website states:

“The promoter often fails to disclose material connection to the endorsed NFT company.”

Responding to TINA.org’s letters related to the promotion of NFTs on their social media accounts without disclosing their connection to the projects, Justin Bieber’s legal team responded by denying any wrongdoing. However, the team confirmed to update the posts on social media.

Golden cross vs. death cross explained

Golden crosses and death crosses are key signals that technical analysts use to determine whether an asset is trending upward or downward.

How can traders use the golden and death crosses in their trading strategies?

Traders typically buy during a golden cross and sell during a death cross. 

Different traders will have different approaches to crossover signals. Some traders might wait for a confirmed golden or death cross before entering or exiting a trade. Others might use the crosses as confirmation signals in conjunction with other technical indicators.

In general, however, the golden and death crosses can be used as trend-reversal signals. If a trader sees a golden cross forming, they might buy an asset in anticipation of prices rising. Similarly, if a trader sees a death cross forming, they might sell an asset in anticipation of prices falling.

Of course, it is always important to use caution when trading crossover signals, as blindly following them might lead to losses. As mentioned, false signals occur and it’s important to confirm any crossover signal with other technical indicators before taking a position.

Seasoned traders also know to look at the bigger picture and consider multiple readings. For instance, a golden cross might happen on an hourly time frame, but zooming out to look at the daily or weekly time frame might show that a death cross is actually in play.

Trading volume is also something to look out for when trading crossover signals, as volume spikes may very well confirm or deny the validity of a signal.

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What’s the difference between a golden cross and a death cross?

The key difference between a golden cross and a death cross is that the former signals an uptrend while the latter indicates a downtrend. 

As mentioned, the two are essentially opposites, in terms of how they appear on the chart and what they signal. Since MAs are lagging indicators, both crosses only serve to confirm the occurrence of a trend reversal, not predict it. As such, they should be used in conjunction with other technical indicators to better understand market conditions.

The golden cross and the death cross are usually confirmed by high trading volume. Other technical indicators that analysts may look at are the moving average convergence divergence and the relative strength index.

Death crosses typically signal the beginning of a long-term bear market, not just in crypto but overall stock markets. The death cross heralded the arrival of major economic crises in the past, such as the Black Monday stock market crash of 1929 and the 2008 financial crisis. 

That said, death crosses may also indicate false signals and are not 100% accurate. For instance, there have been instances of markets recovering after a death cross.

On the other hand, golden crosses signal the arrival of a long-term bullish market. But, despite its apparent predictive ability in forecasting previous huge bull runs, golden crosses may also produce false signals.

Golden cross vs. death cross_ Summary of key differences

What is a death cross?

Compared to the golden cross, a death cross involves a downside MA crossover. This marks a definitive market downturn and typically occurs when the short-term MA trends down, crossing the long-term MA. 

Simply put, it’s the exact opposite of the golden cross. A death cross is usually read as a bearish signal. The 50-day MA typically crosses below the 200-day MA, signaling a downtrend.

Three phases mark a death cross. The first occurs during an uptrend when the short-term MA is still above the long-term MA. The second phase is characterized by a reversal, during which the short-term MA crosses below the long-term MA. This is followed by the start of a downtrend as the short-term MA continues to move downward, staying below the long-term MA. 

Example of a death cross

Like golden crosses, no two death crosses are alike, but specific indicators signal their occurrence. Here’s a look at each stage of a death cross in detail. The first stage of a death cross is typically marked by an asset being in an uptrend. This is followed by a weakening 50-day MA, the first sign that bearishness may be on the horizon. As prices begin to fall after they peak, the short-term MA diverges from the long-term MA.

The second stage sees the 50-day MA crossing below the 200-day MA. This is a key point, as it signals that the asset may be entering a downtrend. The divergence between the two MAs becomes more pronounced as prices continue to fall. The death cross begins to form much more clearly during this stage.

The final stage is marked by the 50-day MA continuing to trend downward, staying below the 200-day MA. This signals that a downtrend is indeed underway. The death cross typically leads to further selling pressure as traders liquidate their positions in anticipation of further price declines.

If, however, the downtrend is not sustained, it could mean a short-lived momentum and prices rebounding quickly, in which case, the death cross is considered to be a false signal.

What is a golden cross?

A so-called “golden cross” occurs when a short-term MA and a major, long-term MA cross over toward the upside. A golden cross suggests a price rise and an upward turn in the market.

The short-term MA moves upward much faster than the long-term MA until market conditions push them to cross. In terms of simple moving averages, golden crosses occur when the 50-day SMA crosses above the 200-day SMA, indicating a definitive uptrend.

Example of a golden cross

A golden cross formation typically has three stages. When selling is depleted, it usually marks the end of a downtrend and thus, the beginning of a golden cross. The next stage is when the short-term MA crosses through the long-term MA. This is quickly followed by the last stage, marked by a continuing uptrend, usually leading to higher prices. 

No two golden crosses are identical, but these three stages are usually the distinctive events that mark the occurrence of a golden cross. Let’s look at each stage in more detail.

During the first stage, buyers are taking control of a downtrend. A short-term weakness in the 50-day moving average signals the beginning of a golden cross. This is because the resulting strength typically arises from buyers beginning to take control just as short-term sellers are drying up.

A leveling out occurs on the chart, with buyers driving prices higher as they try to gain control. The resulting momentum gradually pushes the 50-day MA through the 200-MA, at which point the two periods cross. When the 50-day MA surpasses the 200-day MA, traders typically go on high alert to determine whether an uptrend is occurring or if it’s just a false alarm.

The final stage happens as the 50-day MA continues to push up, indicating its momentum. This also typically leads to overbuying, albeit only in short bursts.

What is a moving average?

The moving average is a stock indicator commonly used in technical analysis that helps create a constantly updated average price. 

A clear grasp of moving average (MA) is crucial in better understanding the golden cross and the death cross. Generally, MAs are calculated to determine the trend direction of an asset or to identify its support and resistance levels.

The MA is a technical indicator that refers to the average price of a specific asset over a defined period. MAs indicate whether the asset is trending in a bullish (positive, upward) direction or moving in a bearish (negative, downward) direction. 

MAs provide useful signals when trading cryptocurrency charts in real time. They can also be adjusted to different periods, such as 10, 20, 50, 100 or 200-day periods. Such periods highlight market trends, making them easily identifiable.  

Traders also use different types of MAs. The first is the simple moving average (SMA), which takes an asset’s average price over a certain period divided by the total number of periods.

Example of the simple moving average (SMA)

Another is the weighted moving average, which, as the name indicates, assigns more weight to recent prices. This makes the value more reflective of recent changes in the market. An exponential moving average, on the other hand, while attributing more weight to recent prices, does not remain consistent with the rate of decrease between a specific price and the price before it.

Moving averages, also called “lagging indicators,” are based on historical prices. Traders use MAs as signals to guide them in buying and selling assets, with the 50-day and 200-day periods being the most closely watched among crypto traders.

Beyond the NFT hype: The need for reimagining digital art’s value proposition

The true potential of NFTs lies beyond profile pictures and art and into solving real-world use cases, implying the need for brainstorming fresh ideas.

With cryptocurrency prices wavering this year, nonfungible tokens (NFTs) and other sub-ecosystem investors have also found themselves in the grips of a bear market.

However, looking beyond the trading value of Ether (ETH), NFTs were primarily created to represent assets and ownership in the real and virtual world. The bear market, as a result, has reignited discussions around how NFTs can backtrack and focus on attending to use cases while the market recovers.

In a conversation with Cointelegraph, Tony Ling, the co-founder of analytics platform NFTGo, shared insights into the NFT ecosystem, revealing the expected trajectory of the ecosystem.

Cointelegraph: NFTs’ rise to mainstream popularity is often attributed to the various real-world use cases it can and has solved. What is your take on the falling NFT market? Do you think the market is set to recover?

Tony Ling: Answering this question requires explaining the value base of NFTs first. Currently, the NFT market is mainly driven by four categories: art, PFP (profile pictures), land and membership. At the moment, PFP is the most dominant. The value base of PFP NFTs mainly includes three parts: financial products, collectibles/luxury goods and memberships, among which the financial products are currently dominant, whereas the derivatives model of NFTs is still in the very early stage. Therefore, with the overall de-bubbling of the crypto market, NFTs, as a low liquidity derivative of fungible tokens (FT), are bound to fall accordingly. This is to be expected.

However, I believe that as the crypto market picks up in 2023–2024, the value of NFTs has room to grow several times that of the larger Crypto market. Its value growth will come from at least two aspects:

One, with the development of NFTs and meta-universe-related technology, NFT use scenarios will be more abundant, and the consumption property of NFTs will grow, and this consumption property is not only to solve real-world problems but also to create new scenarios that do not exist in the real world.

For example, all assets in Otherdeed’s metaverse are NFTs, and these NFTs themselves will generate various economic interaction scenarios, thus realizing new consumption to help people better fulfill their needs and even develop into new productivity tools and business forms.

Two, the development of various NFT derivatives, including NFT fragmentation, NFTFI, NFT mortgage lending, and NFT fixed income products. These new financial products will enable investors to participate in NFT-related investments in a more flexible format, thus attracting more capital, both institutional and individual investors, to this market.

CT: Despite the losses and reduced hype, many projects are still considered viable investments. What do you think is driving this trend? How important is it for NFTs to serve use cases, or is it just investors looking to make a quick buck?

TL: The driving force of any trend is both the “story created by the speculator” and the “real value.” Especially in the early days of an industry, a bubble is more of a reaction to uncertainty, and I believe that it’s primarily builders like us who embrace the uncertainty that is driving the trend. Of course, in addition to builders, large funds, including funds in the crypto space, mega funds and even funds that used to focus on traditional areas are also very important drivers. Indeed, some of them want to make a quick buck, but from the perspective of capital efficiency, I don’t think right now is a good time to make a quick buck in the crypto market.

CT: What trends are still relevant from the early NFT days, irrespective of price fluctuations? And what are new trends you believe will get popular in the coming future?

TL: First of all, more and more people are paying attention to NFTs and there are bound to be orders of magnitude more in the future. Data from NFTGo shows that there are currently over 2.96 million wallets on Ethereum that hold an NFT, compared to just over 200,000 in August 2020. Despite the current market sentiment being cold, there are still 20-30,000 addresses trading NFTs every day. Of course, this figure still has tremendous room for growth. Secondly, builders are continuing to build. You can see that many NFT-related companies have recently acquired financing. Furthermore, although the market has recently been bearish, there are still successful new projects like goblintown and Memeland emerging in the market.

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Although the various PFP projects in the last NFT summer had their own unique characteristics, many were still following the paradigm set forth by the Bored Ape Yacht Club (BAYC). With the further development of the NFT industry, a new mega-trend is bound to emerge. This new trend, I guess, will be the outbreak of the content ecology of the metaverse. The definition of “content” here is broad, and games in the Metaverse can also be defined as “content.” As mentioned earlier, the enhanced consumer attributes of NFTs will help the industry recover, and the consumer attributes mean that NFTs will generate non-investment income cash flow for their holders. One important way to do this is to build “content” in the Metaverse and let the builders own the content and generate revenue. The enjoyers of the content receive intrinsic rewards and are seemingly happy to pay for them.

CT: What is your take on current investor sentiment? How do you think it affects the overall NFT market? What can NFT projects and companies do to improve engagement?

TL: The NFT market sentiment is cold for two main reasons: One, the price of Ether is in a volatile period and a large number of investors are in a wait-and-see phase; two, the PFP narrative and growth pattern are nearing their end, and the recent emergence of projects has not yet brought a new pattern, thus making it difficult to bring new expectations to the market.

The crypto industry is cyclical in nature. I personally recommend that you continue to explore new directions in the industry while keeping enough capital to wait for the next cycle of the crypto industry and seize the opportunity.

CT: As you’ve mentioned, the scope of the NFT market is only limited to the imagination of entrepreneurs. What are some of the use cases that NFTs can and should serve as it beaches further into the mainstream?

TL: In this regard, I want to point out three major subsets of use cases where NFTs are well-positioned for causing mainstream disruption. 

New Art form: Digitization allows for richer forms of artistic expression, and the emergence of NFT and related eco-products solves the problem of digital art ownership and better helps art creators to make a profit. As the digital world merges with the real world, the penetration of digital art in human society will become more and more widespread, thus becoming a huge new market for collectibles as well as luxury consumer goods.

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PFP, self-expression and new forms of organization: I think one of the main reasons for the popularity of PFP projects is that they better meet the human need for self-expression. The ability to tell others “who I am” is an important human spiritual need, and the PFP NFT projects and related ecologies create a good way to meet this need. The PFP NFT projects and their extended community has not only given users a medium for self-expression but also made it easier for people to form communities with others who share similar expressions. Likewise, as the community evolves, these similar people may create new forms of organizations, such as decentralized autonomous organizations (DAOs), to influence society outside of their niche community.

New “public-blockchain-like” carrier: Current land-based projects, such as Otherdeed, Sandbox and Decentraland, may evolve into something similar to public blockchains in the future. New NFT projects, games, and applications may all operate within the ecosystems of these land-based projects.

Global inflation mounts: How stablecoins are helping protect savings

More people are using stablecoins to hedge against inflation, as they offer numerous benefits.

Economies around the world are facing a motley of challenges caused by rising inflation. High inflation devalues national currencies, which, in turn, pushes up the cost of living, especially in scenarios where earnings remain unchanged.

In the United States, the government has responded aggressively to inflation. The nation hit a 9.1% inflation rate in June, prompting the Federal Reserve to implement a series of fiscal countermeasures designed to prevent the economy from overheating. Hiking interest rates was one of them.

Soaring Fed interest rates have consequently slowed down consumer spending and business growth in the country.

The counter-inflation approach has also strengthened the value of the U.S. dollar against other currencies due to tight dollar liquidity checks. As 79.5% of all international trades are undertaken using the dollar, many countries are now paying a premium for imports to compensate for the dollar’s rising value, worsening inflation in those importing countries.

Subsequently, citizens in some flailing economies have started to convert their money into more stable foreign currencies to safeguard their money against value depreciation, and many of them are turning to stablecoins to achieve this.

Whitney Setiawan, a research analyst at the Bitrue crypto exchange, told Cointelegraph, “With the U.S. dollar recording steep appreciation against other fiat currencies, most crypto-savvy users have a special interest in holding stablecoins.”

Setiawan also predicted that the stablecoin sector was likely to disrupt the remittance industry in the near future due to the medley of benefits that stablecoins offer.

“With interest in stablecoins being fueled by various factors, I can predict it will be a matter of time before this asset class topples the remittance industry by a significant margin,” she said.

On this last point, remittance companies have indeed been taking notice and have, in recent months, made moves to claim a share of the stablecoin market. MoneyGram, for example, recently partnered with Stellar to offer stablecoin remittance services on its network.

What are stablecoins?

A stablecoin is a digital currency whose value is often pegged to an asset or regulated by an algorithm to maintain a stable value. 

Collateralized stablecoins are the most popular and are backed by reserves of their underlying assets. In most cases, their value tracks that of popular national currencies such as the U.S. dollar, the British pound or the euro.

This category of stablecoins is used extensively by crypto traders looking to avoid crypto market upheavals and users looking to protect their money against inflation.

Other types of stablecoins include commodity-backed, crypto-backed and algorithmic stablecoins.

Why stablecoins are ideal as instruments against inflation

Stablecoins are ideal as instruments against inflation for numerous reasons. One of them is their immutable and borderless nature.

The decentralized nature of blockchain technology on which stablecoins operate allows them to travel across borders that may otherwise be closed to cross-border financial activities.

Stablecoin transactions are also fast and cost-effective when compared to fund transfers made via commercial bank networks. This makes them convenient for people looking to send and receive money and a hedge against inflation.

Another disruptive property that stablecoins possess is their capacity to cater to the unbanked. Approximately 2 billion people in the world today lack a bank account. Stablecoins have demonstrated the ability to reach this marginalized demographic by allowing anyone with a device that can host a digital wallet, like a smartphone or laptop, to use stablecoins.

In some developing nations, many people lack the necessary documentation to open a bank account, and so they are shut out of their nation’s main financial systems. Using stablecoins allows this group of users to send and receive money easily and use their monetary assets to hedge against inflation when the need arises.

Brian Pasfield, chief technology officer of Fringe Finance — a crypto lending platform that provides lending opportunities to stablecoin holders — told Cointelegraph:

“Banks have strict monetary policies that generally taper down the dollar’s supply. This trend makes stablecoins an attractive option for those aiming to access the USD’s value, as they are generally accessible with little barrier to entry.” 

He also underscored that governments had the ultimate power when it comes to mainstream stablecoin adoption.

“The likelihood of them (stablecoins) becoming commonplace and therefore disruptors lies in the hands of governments themselves, which may seek to implement their own solutions or censor the existing avenues,” he said.

While governments have been slow to adopt official policies regarding stablecoins, or may even undercut private stablecoins with the advent of central bank digital currencies, there are several countries in which citizens have taken matters into their own hands by using stablecoins to protect their savings.

Venezuela

Venezuela has experienced an inflation rate averaging about 3,711% since 1973. The bolivar has lost so much value over the past four decades that it’s had to be reconverted several times. For perspective, the country has had to remove 14 zeroes from its currency over the past 14 years to simplify the monetary scale.

Because the Venezuelan bolivar is volatile and has a value that fluctuates throughout the day, it is common practice for traders to list merchandise and service prices in U.S. dollars. Customers who don’t have dollars are usually expected to pay using bolivars, but at the prevailing exchange rate relative to the dollar.

That said, dollar bills can, at times, be scarce, and this gap is currently being filled by stablecoins. With internet penetration standing at around 72% as per 2020 statistics, online payment companies supporting stablecoin use have already started to set up shop in the country.

The companies include Reserve, a startup backed by Coinbase. Its app is now widely used in Venezuela to buy and sell stablecoins.

Even the U.S. government has joined the stablecoin foray and is increasingly using Circle’s USD Coin (USDC) stablecoin to circumvent corrupt government institutions when providing aid to Venezuelan citizens.

Turkey

Earlier this month, Turkey’s annual inflation rate hit 80%, with the Turkish lira losing approximately 27% of its value against the U.S. dollar so far this year. In 2021, the lira lost 44% of its value against the greenback. Its steep decline has caused demand for stablecoins to rise as people move to protect their money against inflation.

According to data derived from CryptoCompare, the Turkish lira is the second highest fiat-to-Tether (USDT) trading pair and currently accounts for about 21% of all national currency swaps. Tether is a dollar-denominated stablecoin backed by a basket of different assets.

The lira is also the second-most traded Binance USD (BUSD) stablecoin pair and is used in about 5.2% of trades. Binance USD is the dollar-denominated stablecoin from major cryptocurrency exchange Binance.

The growing popularity of cryptocurrencies in the country has, in the recent past, led to monetary control concerns and prompted the authorities to ban the use of cryptocurrencies as a mode of making payments.

However, crypto utility is still high despite the prohibition.

Nigeria

Nigerians are starting to use stablecoins to temper the effects of rising inflation.

According to the latest statistics released by the country’s National Bureau of Statistics (NBS), the inflation rate in the country reached 19.64% in July — a 17-year high.

According to the NBS report, the cost of necessities such as food, transport, fuel and clothing has risen sharply as a result.

The situation has been brought on by climate change, the economic aftershocks caused by the coronavirus and rising insecurity. It has been further compounded by Russia’s invasion of Ukraine, which disrupted crucial import supplies from the two countries. Nigeria imports over $2 billion worth of essential commodities annually from both Russia and Ukraine.

Inflation problems are forcing many Nigerians to start using stablecoins to prevent the devaluation of their savings. According to data pulled from Google Trends, Nigeria ranks top among countries with significant interest in stablecoins. Search statistics indicate that the nation has the highest Tether stablecoin search interest in the world.

USDT is presently the most traded stablecoin.

Argentina

Argentinians are increasingly turning to U.S. dollar stablecoins to shield their money against high inflation. The country’s inflation rate is expected to hit 95% by the end of the year.

Recent developments that have accentuated the demand for stablecoins include the July stablecoin buying frenzy that was triggered by the resignation of Economy Minister Martín Guzmán.

Major crypto exchanges serving Argentinian citizens recorded a spike in stablecoin sales in the aftermath of the announcement, with purchases jumping by over 200%.

The news also caused the value of the Argentine peso to fall by approximately 15%.

Today, Argentinian traders quote dollar prices for high-value items due to the high volatility that’s afflicted the national currency. The Argentine peso has lost over 30% of its value so far his year.

Prevailing U.S. dollar trading restrictions have also helped to increase demand for stablecoins.

Roadblocks for stablecoins

There are numerous limitations that prevent the widespread use of stablecoins as a hedge against inflation. One of them is the changing regulatory landscape that threatens to block their use in some jurisdictions. The European Union, for example, is looking to prohibit the use of dollar-pegged stablecoins in the region in the near future. Such embargoes are likely to limit the use of stablecoins as a hedge against inflation.

Moreover, most countries lack elaborate policies needed to legitimize the crypto industry. Right now, the stablecoin sector would do with extensive Anti-Money Laundering, tax policy and fraud prevention regulations in order to truly go mainstream, but many countries are unwilling to go this far due to the sheer complexity of such processes.

This has led some countries, such as China, Algeria and Egypt, to ban the trading of cryptocurrencies altogether.