Monat: März 2022

• Kadena pumps after Binance listing. 

• Profit-taking has triggered a minor correction, but overall momentum is bullish.

• Kadena’s core metrics as a platform blockchain are behind its strength. 

Kadena (KDA) is one of the best performers today and is currently up by over 14%. This follows news that the KDA token was now listed on Binance, the world’s largest exchange by volumes,

The Binance listing is a big deal, as it opens up Kadena to an even wider range of investors. This means higher volumes and higher demand once the money flows back into the crypto market. 

However, it is not just the Binance-driven pump that makes Kadena a worthwhile investment. Kadena is one of the lowest fees platform blockchains and can scale well. Kadena is also one of the safest platform blockchains in the market because, like Bitcoin, it runs on a Proof-of-Work algorithm. This makes it perfect for companies that want to build sophisticated financial solutions that require a high level of security. 

Interestingly, while Proof-of-Work has been getting a lot of bad rap lately due to energy consumption, Kadena does not have this problem. That’s because, in the Kadena Proof-of-Work algorithm, the cost does not increase with use. This helps it combine the safety of PoW with the efficiency that other blockchains get from Proof-of-Stake. 

This is one of the big factors contributing to Kadena’s rise in adoption and price over the past year. 

Kadena Profit-taking triggers correction.

 Source: TradingView

Hours before the Binance listing, Kadena’s price pumped hard. However, a few hours later, the price entered a correction as traders took profits in anticipation of a post-news dump. 

Bulls seem to be regaining control, though, an indicator that investors are still buying into Kadena in anticipation of even more gains. With Bitcoin now pushing back above $40k resistance, Kadena could easily retest the week’s high of $8.30. 

Summary 

Kadena pumped after the Binance listing. While the price has since dropped due to profit-taking, it seems to be stabilizing again. This indicates that the underlying demand is strong despite the price taking.

The post Kadena rallies after Binance listing – Can the pump last? appeared first on Coin Journal.

According to a Bloomberg report released Friday, hedge fund Fir Tree Capital Management, who have $4 billion in assets under management, made a large short bet against Tether (USDT), the stablecoin which is pegged to the US dollar.

One-to-one backing

With a market capitalisation of $80 billion, Tether is the world’s third largest cryptocurrency, behind only Bitcoin and Ethereum. The company has long been under fire surrounding accusations that $80 billion worth of reserves is not held to back the cryptocurrency one -to-one, an issue the company has repeatedly tried to clear up, but one which will not go away.

Indeed, I interviewed Tether CTO Paolo Ardoino last week following the announcement by the Swiss city of Lugano that Tether would be accepted as legal tender, and asked him whether the city had concerns over whether the cryptocurrency was fully backed:

CoinJournal: Did Lugano seek assurances on whether Tether is 100% backed, or were they content with what Tether has already released publicly on the matter?

Paolo Ardoino: Tether and the city of Lugano sat down and openly discussed the misconceptions about the company. Tether has publicly stated that it has ongoing conversations with regulators and law enforcement and has made valiant efforts in complying with all requests for transparency.

Fir Tree Capital Management remain among the sceptics, however, with Bloomberg’s report claiming that the company expects to receive a payoff within 12 months. The short is motivated mainly by Tether’s ties to Chinese real estate developers, with revelations of Evergrande Group’s finances last year causing turmoil. While originally spooking crypto markets, Tether came out to confirm that Evergrande Group commercial paper did not feature among the $24 billion in high-yield commercial paper that the firm owns. Evidently, this is a claim which Fir Tree does not believe.

Structure of the Short

While details about the structure of the short bet have not been made public, we can speculate how it may be constructed. Given the fact Tether is a stablecoin with no price volatility (i.e . it always trades at $1), the short is an unconventional one. Where typically a short bet presents unlimited downside (as the shorted stock or financial instrument theoretically has no limit to the upside), this is different, given Tether will not rise in price under any circumstances.

In truth, it is more likely to resemble the purchase of a credit default swap (CDS) on a debt obligation, the likes of which entered mainstream conscience amid the Great Financial Crash last decade (and were the subject of Hollywood blockbuster The Big Short). Fir Tree are likely paying a fixed spread to bet against Tether, and will receive a large payoff if Tether defaults (alternatively, if a default becomes more likely in the eyes of the market, the spread would widen on the contract and Fir Tree could cash out at a profit).

Asymmetric Payoff

Therefore, the hedge fund’s bet will have an asymmetric payoff schedule to the upside. Of course, if Tether default and they do receive their payoff, the cryptocurrency markets will likely implode. The centrality of Tether to the ecosystem at large cannot be overstated – the stablecoin clears over $50 billion of daily trade volume (Apple stock volume, for comparison, averages $98 million in daily volume over the last three months).

Tether 24H volume 2019-2021, via Statista

Tether sceptics are nothing new, but this amounts to quite a high-profile move by Fir Tree, even if it is a low-risk, high-reward structure. The fund supposedly commenced shorting Tether last July, while Bloomberg also claims Fir Tree are considering setting up a separate fund for the sole purpose of shorting Tether, should there be enough client interest.

For the sake of crypto investors around the globe, the hope is that Tether are, in fact, what they claim to be – fully backed. If not, Christian Bale’s next role could be as a Fir Tree executive.

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