First Mover: Bitcoin Pause, Ethereum Snafu, 1,000% Returns Put Focus on Exchange Tokens

First Mover: Bitcoin Pause, Ethereum Snafu, 1,000% Returns Put Focus on Exchange Tokens
Traders are giving exchange tokens a new look – as a bet on the exchanges themselves.
(Pixabay, modified by CoinDesk)

Bitcoin was higher, pushing toward the upper edge of its recent range between about $14,700 and $15,600.

“The positive sentiment towards has not gone away,” said Denis Vinokourov, head of research at crypto prime broker Bequant. 

In traditional markets, Asian shares tumbled, led by Alibaba and Tencent, as Chinese government issues regulations designed to curb growing influence of big tech companies. European shares were up, and U.S. stock futures pointed to a higher open. Gold weakened 0.1% to $1,875 an ounce. 

Crypto-exchange tokens like Binance coin () and FTX’s FTX () started out as a sort of in-house currency: Traders could use them within the closed environment to buy digital assets, getting discounts on transaction fees. 

But recently some digital-asset traders are thinking of them a bit more like traditional stocks – as a bet on the exchange itself. It’s also increasingly possible to park the tokens in various systems and protocols for yield, not too dissimilar from a dividend. 

And some of them are registering outsize gains. Binance’s BNB tokens have gained about 30% this year, while FTX token is up 157% and upstart Hxro’s token has increased 10-fold in price. 

Exchange management teams increasingly viewing the tokens as a way to bind loyalty among customers. The rationale, according to Jack Purdy, senior research analyst at the cryptocurrency research firm Messari, could be that the exchanges now view token holders as an important component to their long-term business success.

The specter of an unexpected move by authorities to crack down on the tokens – precisely because of their resemblance to stocks – remains a threat.

Exchange tokens “are a gray area with equity-like characteristics,” Purdy said. “Regulatory concerns are definitely a problem because they definitely look like securities under U.S. laws.” 

– Muyao Shen 

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After the recent rapid rally, the bitcoin market is likely to take a breather before continuing its rise toward the end of the year, analysts told CoinDesk.

“The cryptocurrency may consolidate for a short period before moving higher” toward the end of the year, said Chris Thomas, head of digital assets at Swissquote Bank.

Indeed, further notable gains look unlikely in the short term, as the cryptocurrency’s 60% rally from $9,800 to $15,900 seen over the past two months looks overstretched, per the technical charts. Both the 14-day and 14-week  are hovering well above 70, indicating overbought conditions and scope for consolidation or minor pullback.

Patrick Heusser, senior cryptocurrency trader at Zurich-based Crypto Broker AG, expects bitcoin to consolidate in the range of $14,000 to $16,000 in the next few weeks. 

He expects the pause to allow a rally in alternative cryptocurrencies, most of which have lagged bitcoin in the past two months.

– Omkar Godbole

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Ether (): Prices hold firm as Ethereum service provider Infura suffers outage from . 

Bitcoin (BTC): Nearly  blockchain in October despite cool-down in the thriving cryptocurrency subsector of decentralized finance, known as DeFi.  

Filecoin (): Winklevosses’ Gemini crypto exchange is developing a . 

Balancer (): Cryptocurrency funds Pantera Capital and Alameda Research invest in liquidity provider . 

Algorand (), cosmos (), cardano (), kyber network (), omg network (): Growth in trading volume means tokens are  while bitcoin sv (), dai (), zcash (), monero () and dash () are out. 

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