First Mover: Bitcoin Meets ‘Torrent’ as Lowly Binance Coin Gets $40B Valuation

Price Point

Bitcoin (BTC) pushed higher on Friday to a new all-time-high price, stopping just shy of $53,000. At the current level of outstanding bitcoin supplies, a move above $53,665 would push the largest cryptocurrency’s market capitalization to the $1 trillion mark, seen as a milestone in bitcoin’s maturation as a global asset. 

Signs continued to mount that bitcoin is seeing increased mainstream adoption – or at least mainstream attention from the likes of the giant bank JPMorgan Chase, U.S. Treasury Secretary Janet Yellen, Microsoft founder Bill Gates and the bond-investing legend Jeff Gundlach. (See Bitcoin Watch, below.)   

But bitcoin perhaps wasn’t even be the biggest story this week in digital-asset markets. Binance coin (BNB), the in-house in-house token from the similarly named cryptocurrency exchange, has soared this month to a $40 billion market capitalization, ranking it third among all digital assets behind bitcoin and Ethereum’s ether (ETH). 

In traditional markets, European shares rose and U.S. stock futures pointed to a higher open. Gold slid 0.2% to $1,772 an ounce. 

The News

PAY YOUR SWISS TAXES IN BTC: The Swiss canton of Zug – dubbed “Crypto Valley” thanks to the many digital-asset companies drawn to the jurisdiction because of its friendly blockchain and crypto regulation – has started accepting tax payments in cryptocurrency. For now, there’s a cap of 100,000 Swiss francs ($111,300). “As the home of the Crypto Valley, it is important to us to further promote and simplify the use of cryptocurrencies in everyday life,” said Zug’s finance director, Heinz Tannler, when the tax initiative was announced.

BIDDERS UP: Christie’s, the 255-year-old auction house of art, antiques and apparently meterorites, will now accept cryptocurrency for payment, Bloomberg reported. “That Christie’s is willing to accept cryptocurrency for the first time,” according to the piece, “says more about the auction house’s attempt to break into new audiences than it does about a shift in the traditional art market.”

Bitcoin Watch

Bitcoin beating gold where it counts right now – on the inflation trade

Bitcoin continues to outshine gold amid calls for more fiscal spending to boost the U.S. economy back to full strength.

The world’s biggest cryptocurrency set a new record price of $52,954.49 on Friday, CoinDesk’s Omkar Godbole reported, having scaled the $50,000 mark two days prior. Meanwhile, gold fell to $1,760 early Friday to hit the lowest level since July.

Bitcoin’s potential use as a hedge against inflation, and possibly a better one than gold, has become a key narrative on Wall Street as well as in Washington. 

In an interview with CNBC on Thursday, U.S. Treasury Secretary Janet Yellen said that the proposed $1.9 trillion stimulus package could help the U.S. get back to full employment in a year, a sign that President Joe Biden’s administration is undaunted in pushing for a large bill. She added that the risk associated with delivering too little stimulus is greater than the price of doing something big.

But she added that bitcoin is a “highly speculative asset.” 

Jeffrey Gundlach, CEO of the $130 billion DoubleLine Capital and one of the world’s most renowned bond investors, tweeted Thursday that he was a “long-term dollar bear” and that bitcoin was “maybe The Stimulus Asset” and that it “doesn’t look like gold is.” Gundlach previously had said he didn’t believe in bitcoin.

“Lots of liquid poured into a funnel creates a torrent,” Gundlach wrote in the tweet. 

Analysts for JPMorgan wrote in an 86-page report that bitcoin’s “competition with gold as an ‘alternative’ currency is here to stay,” though they called it an “economic sideshow” in that “the rise of digital finance is the real post-Covid-19 story.” 

Bill Gates, the Microsoft-founder-turned-philanthropist, said he’s neutral, notable perhaps because he didn’t immediately pan it, as some other successful U.S. business people have done, later to miss out on big market gains. (Looking at you, Warren Buffett.)  

“The past couple of weeks have seen fundamental arguments made for choosing silver, bitcoin, and Treasuries over gold,” wrote Edward Moya, senior market analyst for the foreign-exchange broker OANDA. “Bitcoin has benefited from relentless retail demand and on expectations that institutional interest is still growing.”

Market Moves

Binance coin shoots to $40B valuation, trailing only bitcoin and ether

While cryptocurrency exchange Coinbase’s valuation soars to a $77 billion valuation based on private-share trading, rival Binance is seeing rocketing demand for its exchange tokens in digital-asset markets.

Prices for the BNB tokens have jumped five-fold this month, for a market value of about $40 billion. According to Messari, that valuation makes Binance coin the third-biggest digital asset after bitcoin and Ethereum’s ether.

The token serves as Binance’s internal currency: It can be used to buy cryptocurrencies on the exchange and pay fees. So the jump in BNB’s price might reflect speculation that Binance, already one of the world’s biggest cryptocurrency exchanges by trading volume, will occupy a dominant role in the future of fast-growing digital-asset markets.  

According to CoinDesk’s Sebastian Sinclair, the price rise might be tied to increased interest in a decentralized financial application called PancakeSwap, which helps users find yield-earning opportunities in crypto markets. PancakeSwap runs on Binance’s own blockchain, Binance Smart Chain. 

Daily volumes on PancakeSwap have shot up to more than $1 billion, from $37 million at the start of the year, CoinDesk’s Will Foxley reported.

The BNB token is needed to process transactions on the Binance Smart Chain, similar to the way ether (ETH) is used on the Ethereum blockchain.

For what it’s worth, the BNB token itself is set atop the Ethereum blockchain, under the common ERC-20 standard for digital tokens. 

That helps explain why a tokenized or “synthetic” version of the BNB token, called wrapped BNB (WBNB), appears to be the primary token traded on PancakeSwap within the Binance Smart Chain ecosystem, according to CoinGecko, a crypto-markets tracking site:

Opinions and Observations

DEFI AT $400 BILLION? Bloq founder Matthew Roszak told CoinDesk TV  that the growing arena of decentralized finance, known as DeFi, where total collateral now sits at $40 billion, could “add another zero in a year from today.”

TULIPMANIA 2.0? “While bubbles of the past explode only to later collapse and never to return to their previous glory, bitcoin is known for its “two-steps-forward-one-step-back” moves,” Joakim Book, a research fellow at the American Institute for Economic Research, writes in op-ed for CoinDesk Opinion.

WHAT IS A BITCOIN ETF, AND WHY DOES IT MATTER? CoinDesk’s Ollie Leach explains.