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Founded: Bitfinex $ 1B IEO Raise Can Press Bitcoin (BTC) Lower

On Saturday, reports reported that Bitfinex, one of the largest crypto switches, exploded, revealed official plans to sell $ 1 billion worth of an asset called LEO. Although this seems innocent, a leading analyst warns that it could be detrimental to Bitcoin (BTC).

Related Reading: Bitfinex Premium continues to & # 39; Rally & # 39; Even after Bitcoin (BTC) stabilizes, Tether Fears Subside

Bitfinex To Sell $ 1B Worth of LEO

As previously reported by NewsBTC, Dovey Wan, founder of Primitive Ventures, revealed that Bitfinex was planning to raise $ 1 billion through the sale of brand-name crypto tokens through an on-platform's first coin supply, more commonly known as an IEO. However, some took this news as a joke and noted that it was not possible that Hong Kong's headquarters would change such a strategy, especially after last week's news that it is in precarious legal and financial conditions.

Per a document published by Chinese cryptocurrency investor Zhao Dong, first reported by The Block, but IEO is quite legitimate. As Wan revealed, Bitfinex intends to sell $ 1 billion of cryptocurrency. Funnily, however, Larry Cermak of The Block has said that $ 600 million of the funding round has already been awarded to private investors, reported to be industrial insiders, Bitcoin Whales and Asian venture capital firms.

On the case of the token itself, the document suggested that LEO may be very similar in use to the Binance Coin (BNB). More specifically, Bitfinex, in turn, will spend up to 27% of its monthly profit to buy LEO tokens, which is a dividend for holders. It was also stated that if the exchange gets $ 850 million, it is back from Crypto Capital, a Panamanian crypto-centric payment processor who is currently in the midst of an intense legal debacle and thousands of Bitcoin lost in a historic hack, Bitfinex will be able to buy back LEO with most of that capital.

Utility-wise, LEO can be used to reduce the prices they pay on the crypto switch market. Taking charges for crypto-to-crypto pairs, lending rates and withdrawal fees will all likely be subsidized for LEO holders.

Negative Bitcoin Price Action Catalyst

While this news seems to be independent of the broader crypto market, Tom Lee, Fundstrat's research director, has postulated that this $ 1 billion increase could actually be a negative price action catalyst for Bitcoin. The prominent commentator explains that $ 1 billion worth of new tokens will adversely affect BTC and other digital assets, as the market needs to "absorb" an influx of LEO tokens.

As Lee notes, Bitcoin sells miners $ 7mm per day, so a $ 1 billion IEO is essentially 142 days worth of mines selling to take place in a day. "$ 1 billion IEO is much" new "token supply and probably has a short-term negative impact of $ BTC #bitcoin and other crypto that the market needs to absorb this supply … [19659008] … unless all buyers of IEO come, are new to crypto (fiat to crypto), which makes less sense. Https://

– Thomas Lee (@fundstrat) May 4, 2019

However, Lee seems to be inclined bullish overall, despite the news of LEO. As of previous reports from this withdrawal, the Fundstrat founder stated that the fact that BTC has rallied despite Tether "FUD" can only be an early sign that "the crypto-winter ends." He adds that if Bitcoin continues to hold strong, in the absence of responding to the constant flood of Tether-related news for two weeks, he would "be inclined to claim that this is [another] cause [why] the crypto price is over. "This is not the only development that makes the analyst bullish.

During a recent CNBC segment, Lee took a gander in blockchain statistics, especially Bitcoin. He argued that the transaction value of over-the-top transfers has turned positive on an annual basis, which means that BTC still sees constant use for its intended purpose, despite the brutal market conditions. What is even more positive is the fact that average daily transactions processed on the Bitcoin chain reach national level, but the transaction fee market has yet to bubble.

Secondly, the prolonged cryptocurrency optimist saw the fact that BTC has moved over and kept at the top of the 200-day simple moving average. Through Bitcoin's history and the history of other floating, tradable assets, the above-mentioned technical level has been viewed as a kind of "make or break" point, as the attitude over it signals that bulls have the upper hand. Combine this with the fact that Bitcoin's daily chart recently printed a golden cross, which saw 50-day single moving average cross over the 200 days, is another reason, in Lee's eyes, that "spring" may finally come for digital assets across the board.

Finally, and undoubtedly, most importantly, is the growth in trading activity in cryptographic markets, especially over-the-counter (OTC) tables. Referring to closed door calls, Lee explained:

"We investigated OTC brokers, who are very important for facilitating institutional investors, and they have all talked about a 60% to 70% increase in activity / number of customers and trading volume per client. The basis is better; technicals are improvement and activity of HODLers as well. "

  Featured Image from Shutterstock 

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