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Bitcoin Utility Grows During The Bear Market

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On-chain data shows that the current market cycle is unique, with more Bitcoiners transacting peer-to-peer and outside the realm of exchanges.

One of the principal aspects of on-chain analysis is to examine transactions over the network. Unlike exchange-involved transactions, which often lead to price volatility, transactions outside of exchanges demonstrate the network utility as possible payments among users. It makes a positive contribution to the development of the network over the long term if users are interacting with one another. Therefore, it is essential to examine the transaction behavior over the network.

The recent spike of bitcoin inflows to exchanges make many worried, but does it adversely affect the entire network on the macro view? (source)

Regarding the sum of all exchange in-house transactions, the number of transactions circulated within the exchanges’ wallets have been trending lower from the May 2021 peak. That means there is not as much transfer activity through the marketplace. It looks different from the previous price cycles when this number was strongly correlated to the price action.

Transactions conducted within exchanges’ wallets in downtrend. (source)

Meanwhile, the total number of deposits and withdrawals to and from exchanges has plunged downwards, demonstrating that people may be less engaged in the exchanges.

The deposits to exchanges plummeted. (source)
The withdrawals from exchanges are also decreasing. (source)

Additionally, the number of transactions from all exchanges to derivatives exchanges has plummeted as a clue that derivatives trades are not very attractive at the moment.

Fewer transactions into derivatives exchanges. (source)

In the meantime, there is no further possibility of cumulative selling pressure due to the substantial drop in the number of transactions from all exchanges to spot exchanges. This offers the slightest of encouragement and mitigates bearish sentiment among stakeholders.

The decreasing possibility of selling pressure on spot exchanges with fewer bitcoin on spot exchanges. (source)

Concurrently, the sum count of transactions has moved up in contrast to the downtrend in exchange-related transactions. It implies an increased supply/demand outside of exchanges, resulting in a high usage of the Bitcoin network.

High network utility, as total transaction count is increasing and exchange transactions decreasing. (source)

Network value-to-transaction (NVT) is the ratio of market capitalization divided by transaction volume. That helps gauge the relativity between network value and network usage as transaction volume represents network usage. A falling NVT proves that the velocity of coins circulating in the bitcoin economy has risen, and the network value is relatively undervalued compared to its high utility.

NVT ratio illustrating the undervalued network and high velocity. (source)

It is clear how quickly and proportionally transactions are conducted on the network in and outside of exchanges. We should pay attention to the sum of unique active addresses, including both senders and receivers. The sum of active addresses has gradually increased since the July 2021 bottom. This has been a good indicator for the development of network activity since Bitcoin’s inception.

Total active addresses revealing the development of the Bitcoin network. (source)

Ultimately, long-term investors are concerned about the digital attributes to the velocity of bitcoin usage in the economy rather than its trading price. With limited supply and increasing demand, an increase of transactions and active addresses over time demonstrates the growth of the Bitcoin network’s utility.

The key feature of the on-chain analysis is the HODLing behavior of long-term investors. One of the most reliable indicators is UTXO value bands which illustrate the distribution of all UTXOs in terms of their size. All studied UTXO bands herein represent the total value of all UTXOs ranging from 10 to more than 10,000 bitcoin, which focuses on the behavior of whales. As seen in the following figure, more UTXOs have been held in enormous quantities suggesting that whales are not distributing coins and are instead accumulating.

Whales are accumulating in line with UTXO value bands. (source)

In addition, UTXO age bands display the number of UTXOs that last moved within a specified duration. All considered bands (over six months) have been maintained and gradually expanded. This implies that more investors have been holding and accumulating more coins.

Coin age maturity with reference to UTXO age bands. (source)

The UTXO count age bands and value bands suggest that short-term liquidity is dominant throughout the market, whereas long-term liquidity is still virtually dormant and slightly increasing. Simply put, long-standing HODLers are calmly confident regardless of the short-term volatility in bitcoin’s price.

On balance, the utility of the Bitcoin network has been growing during the recent semi-bear market. The transaction behavior outside of exchanges has been carried out as a feasible payment process, and the Bitcoin community has adopted the HODLing attitude.

This is a guest post by Dang Quan Vuong. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc. or Bitcoin Magazine.

Crypto Exchange Coinbase Halts Service in India Due to ‘Informal Pressure’ From Central Bank RBI

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Crypto Exchange Coinbase Halts Indian Operation Due to 'Informal Pressure' From the Reserve Bank of India, Says CEO

The Nasdaq-listed cryptocurrency exchange Coinbase has revealed that it halted operation in India a few days after launch due to “informal pressure” from the country’s central bank, the Reserve Bank of India (RBI), says CEO Brian Armstrong.

Coinbase Shares Experience in India

Coinbase Global provided an update on its Indian operation during the company’s earnings call Tuesday, particularly why it exited the Indian crypto market a few days after launch.

Anil Gupta, vice president of Investors Relations at Coinbase, asked CEO Brian Armstrong: “Some shareholders are curious about the recent developments in India. Can you explain the halting of UPI [Unified Payments Interface] transfers there? And what impact will that have on your expansion plans in the market?”

Coinbase launched in India on April 7. Armstrong went to India for the launch. The company said at the time that users could use the UPI system to buy cryptocurrencies on the platform. However, the company disabled the UPI option a few days later.

“There’s a lot of interest in crypto amongst the people there in India. So we had an integration with what’s called UPI. And this was a great example of just our international strategy,” Armstrong said during the earnings call. He elaborated:

A few days after launching, we ended up disabling UPI because of some informal pressure from the Reserve Bank of India, which is kind of the Treasury equivalent there.

“And India is a unique market, in the sense that the supreme court has ruled that they can’t ban crypto, but there are elements in the government there, including at Reserve Bank of India, who don’t seem to be as positive on it,” the Coinbase boss opined.

Armstrong noted that what the RBI is doing has been described as a “shadow ban” by the media. “Basically, they’re applying soft pressure behind the scenes to try to disable some of these payments, which might be going through UPI,” he detailed.

The Coinbase executive further said: “I guess we have a concern that they may be actually in violation of the supreme court ruling, which would be interesting to find out if it were to go there.”

He continued: “But I think our preference is really just to work with them and focus on relaunching. I think there’s a number of paths that we have to relaunch with other payment methods there. And that’s the default path going forward. Armstrong concluded:

My hope is that we will be live back in India in relatively short order, along with a number of other countries, where we’re pursuing international expansion similarly.

What do you think about Coinbase’s experience in India? Let us know in the comments section below.

Uzbekistan President Issues Decree Regulating Cryptocurrencies, Mining and Trading

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Uzbekistan President Issues Decree Regulating Cryptocurrencies, Mining and Trading

The government of Uzbekistan has moved to expand its crypto regulations through a decree signed by President Shavkat Mirziyoyev. The document provides definitions for terms like crypto assets, exchange, and mining, and determines the main regulatory body for the industry.

Agency Under President Mirziyoyev to Oversee Crypto Market in Uzbekistan

Uzbekistan’s head of state, Shavkat Mirziyoyev, has signed a new decree expanding the regulatory framework for the Central Asian nation’s crypto space. Its stated goal is to further develop digital technologies, create favorable conditions for entrepreneurship and improve the legislation in this sphere.

The National Agency for Project Management under the president has been transformed into National Agency for Perspective Projects, Forklog reported, quoting the document. The NAPP will become the country’s main crypto watchdog.

The regulatory body has been tasked to implement the state policy in the crypto economy and ensure investors’ rights are protected. It will also take charge of introducing blockchain technologies to the public sector and combatting money laundering, terrorist financing and weapons proliferation through cryptocurrencies.

The decree defines crypto assets as property rights representing a collection of digital records in a distributed ledger that have value and owner. Starting from Jan. 1, 2023, Uzbekistan’s citizens and companies will be allowed to buy, sell and exchange cryptocurrencies through crypto service providers.

The President’s order lists a number of entities that fall under this category, including digital asset exchanges, mining pools, crypto depositories, and crypto stores. They will be required to register as local businesses and obtain licenses or mining certificates from the government agency.

Uzbekistan legalized crypto trading in 2018 but in late 2019 the government banned local residents from purchasing cryptocurrencies. They could only sell. In November, 2021, citizens were allowed to trade crypto assets for national currency on licensed domestic crypto exchanges while non-residents were permitted to exchange digital coins for foreign fiat.

Decree Bans Unauthorized Mining, Minting of ‘Anonymous’ Cryptos

Only registered firms will be able to mine cryptocurrency in Uzbekistan. Mining farms will pay a higher electricity tariff during peak hours of consumption. Unauthorized mining will be prohibited. The ban applies to the minting of what the decree calls “anonymous cryptocurrencies” as well and any transactions with them.

Just as before, Uzbekistanis will not be permitted to use or accept cryptocurrencies as a means of payment for goods and services within the country. On the positive side though, crypto-related transactions of individuals and companies will not be subject to taxation, according to the document dated April 27, 2022.

Tax breaks will also be provided to participants in a new regulatory sandbox that the NAPP will establish to pilot crypto projects. The entities involved in the trials will also be exempt from other obligations to the state budget, including customs payments other than the duties for imported hardware and software.

What are your thoughts on Uzbekistan’s new crypto regulations? Let us know in the comments section below.

Leading Eastern European Exchange Exmo Sells Business in Russia, Belarus

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Leading Eastern European Exchange Exmo Sells Business in Russia, Belarus

Exmo, a U.K.-based crypto exchange with extensive presence in Eastern Europe, is pulling out of Russia, Belarus and Kazakhstan. The trading platform, Exmo.com, says it’s making the move to avoid jeopardizing its expansion in other regions by operating in high-risk markets like these. The business has been sold to a Russian vendor, alongside rights to the Exmo.me domain and branding.

Crypto Exchange Exmo Transfers Russia Operations to Local Entity

Major Eastern European exchange Exmo announced earlier this week it’s selling its digital asset business in Russia and Belarus. The company explained the “tough decision” with efforts to avoid risking its global expansion plans by working in these countries. Both nations have been targeted by Western sanctions over Moscow’s invasion of Ukraine.

“In addition, our Russian UBO, Eduard Bark, is leaving the company, transferring his stake as a part of a response to one of our directors, Serhii Zhdanov,” Exmo pointed out. “Kazakhstan clients were also included as a part of the deal, since a new team is based in Kazakhstan,” the press release further revealed.

The Exmo.com user agreement has been recently changed to indicate that Russian, Belarusian and Kazakhstan residents are no longer being onboarded. The exchange also reminded traders that pairs with the Russian ruble on the Exmo.com platform have been disabled since April 15, 2022.

According to its website, Exmo currently maintains offices in the U.K., Ukraine, Poland, Lithuania, U.S., and Cyprus, and employs over 200 people. “As a company we are very confident and positive about the future of our business and consider the new structure of the business commercially viable and sustainable,” a statement noted.

Exmo is transferring the Russian, Belarusian and Kazakhstan crypto exchange business to the owner of a Russia-based software development company, one of the vendors that have been providing engineering services to the exchange in the past three years, the announcement unveiled without identifying the new entity.

According to the crypto news page of the Russian business news portal RBC, the ownership of Exmo’s assets in the three markets has been handed over to a company called “ЭКСМО РБК ТОО” (EXMO RBC LLP) on March 31, this year.

Nothing will change for customers in the three jurisdictions, a representative elaborated, as the new platform has the rights to use the same branding, software and technical developments as well as the official domain Exmo.me. The transformation will allow the exchange to work more effectively with payment systems, banks and to actively participate in the regulation of cryptocurrencies in the region.

Exmo.me does not plan to restrict Russians’ access to cryptocurrencies, a company official was quoted as stating in another RBC report published Thursday. The spokesperson also assured that the exchange will seek to expand its operations in Russia while emphasizing:

We see great potential in the region of the Russian Federation and will continue to actively develop the Russian part of the business and follow the long-term plans of the previous team.

Crypto businesses working in the Russian market are facing mounting restrictions as Western governments continue to expand sanctions over the ongoing war in Ukraine, some of which are aimed at closing the loopholes in the crypto space. Following the news of the Exmo split, its main competitor in Russia, Binance, announced it’s limiting services for Russian users to comply with the latest EU sanctions.

Do you expect other crypto exchanges to exit the Russian market? Let us know in the comments section below.

Report Says Binance Shared Client Data With Russia, Crypto Exchange Denies Allegations

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Report Alleges Binance Shared Client Data With Russia, Crypto Exchange Denies

Cryptocurrency exchange Binance has been accused in a media report of agreeing to provide user data to Russia’s financial watchdog. The trading platform has refuted the allegations. It also insists it’s complying with Western sanctions imposed over Moscow’s invasion of neighboring Ukraine.

Binance Consented to Russian Request for Customer Info, Reuters Claims in ‘Special Report’

Binance, the world’s leading digital asset exchange, has agreed to hand over customer data to Russia’s financial intelligence agency, a report by Reuters suggests. The article refers to messages allegedly sent by Binance’s regional head Gleb Kostarev to a business associate revealing that the Russian officials asked for such information, including names and addresses, during a meeting last April.

The Federal Financial Monitoring Service of the Russian Federation (Rosfinmonitoring) saw its request supposedly motivated by the need for help in the fight against crime. Quoting an anonymous source familiar with the matter, the authors note that at the time, the financial watchdog was trying to trace millions of dollars in bitcoin raised by imprisoned Russian opposition leader Alexei Navalny’s team.

Rosfinmonitoring labeled his network a terrorist organization a year ago. The Kremlin critic claimed the crypto donations were used to fund efforts to expose corruption inside President Putin’s administration. Supporters who sent money through Russian banks were interrogated, Navalny’s foundation says. After his arrest in January 2021, it encouraged backers to donate via Binance.

Navalny was detained upon his return to the Russian Federation, after recovering from poisoning that the West blames on Russia’s Federal Security Service (FSB), an accusation rejected by Russian authorities. Relying on statements from several unidentified persons who interacted with the regulator, Reuters writes that the agency acts as an arm of the FSB. Officially, it is an independent body responsible for combating money laundering and terrorist financing.

Kostarev, Binance’s representative for Eastern Europe and Russia, reportedly consented to Rosfinmonitoring’s request to agree to share client data, according to the said messages. He also told his business partner he didn’t have “much of a choice.” Binance commented for Reuters it had been “actively seeking compliance in Russia” before the war in Ukraine, which would have required it to respond to “appropriate requests from regulators and law enforcement agencies.”

Crypto Exchange Rejects Claims as ‘Categorically False’

Quoting an industry research firm, the Reuters article further unveils that Binance’s trading volumes in Russia have spiked since the conflict began, as Russians sought to protect their assets from sanctions and a devaluing national fiat. Data from Cryptocompare indicated that in March Binance processed almost 80% of all ruble-to-crypto trades. On Thursday, the exchange announced, however, it’s limiting services for Russian account holders to comply with the latest EU sanctions.

Refuting the allegations in the report, Binance described the cited market data as inaccurate, and while pointing out that it “aggressively implemented sanctions against Russia,” in answers to questions from Reuters, it reiterated its belief that “it would be unethical for a private organization to decide unilaterally to freeze millions of innocent users’ accounts.” In a statement published Friday, the company said it had “stopped working in Russia” as soon as the war started.

While emphasizing that “fulfilling disclosure obligations to the authorities in each jurisdiction is a large part of becoming a regulated business,” the global crypto trading platform said that the suggestions it shared any user data, including related to Alexei Navalny, with agencies controlled by the FSB and Russian regulators are “categorically false.” Binance insisted it had not sought to assist the Russian state in its attempts to investigate the opposition leader.

What are your thoughts on the report alleging that Binance shared user data with Russia’s financial watchdog? Let us know in the comments section below.