 February 26, 2021  Everything you need to make sense of the crypto markets and beyond Sponsored By:  By the CoinDesk Markets Team Edited by Lawrence Lewitinn If you were forwarded this newsletter and would like to receive it, sign up here. Bitcoin (BTC) -6.65% $46,965 Ether (ETH) -7.94% $1,493 (Price data as of Feb. 26 @12:30 UTC) Good morning. Here's what we're writing about:
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MARKET MOVES by OMKAR GODBOLE Turmoil in Bond Markets Continues to Weigh on Bitcoin, Stocks The biggest cryptocurrency fell to two-week lows below $45,000 early Friday as major European stock market indexes fell by more than 1%, tracking Thursday's losses on Wall Street.
 Bitcoin prices, Feb. 25 - Feb. 26, 2021 (Source: CoinDesk)
The U.S. 10-year yield rose to a one-year high of 1.6% on Thursday, lifting its Japanese government bond counterpart to three-year highs early Friday.
 U.S. Treasury 10-year yields over the past year (Source: TradingView)
While the cryptocurrency has now regained some poise to trade near $45,500, the relief could be short-lived, as some analysts foresee a continued rise in yields. "The [rising] copper-gold ratio, an indicator for future economic growth, suggests bond yields could rise a lot more from here," Jeroen Blokland, portfolio manager for the Robeco Multi-Asset funds, tweeted Thursday.
 Copper-to-gold ratio over the past year (Source: TradingView)
Besides, bitcoin now looks weak as per technical studies. The weekly chart shows a bearish divergence of the relative strength index (RSI), a momentum indicator. "Last two times we got a bearish divergence like that on the weekly, bitcoin saw a six- to seven-week correction with prices dropping as low as 41% lower than the high," market analyst Lark Davis noted. --Omkar Godbole
Read more from Omkar Godbole on CoinDesk.com: Bitcoin Drops Below $45K, Eyes Biggest Weekly Price Loss Since March 2020
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LAWRENCE LEWITINN
CoinDesk on Coinbase's Road to IPO
Every once in a while, someone will mistakenly call our publication, CoinDesk, "Coinbase," the name of one of the largest crypto exchanges. The two are obviously very separate entities (though CoinDesk's parent company, Digital Currency Group, was an early investor in Coinbase).
However, the CoinDesk homepage was flooded with stories about Coinbase all day Thursday as the San Francisco-based company's Form S-1, the prospectus it's required to file to the Securities and Exchange Commission, was published by the regulator.
Why spill all this digital ink? In part it's because the filing spells out a lot of the opportunities and risks faced by companies and entrepreneurs trying to make it to the top of this new facet of the economy. Also, it's a peek inside how one of the most successful businesses in this space got to where it did and how it sees the world. Or, at least, how it wants us to think it sees the world.
Here's some of what we've been able to glean:
- Coinbase's Financials Are Now Public Ahead of Stock Market Listing: The company made a profit of $322.3 million in 2020 but a loss of $30.4 million in 2019.
- Coinbase Paid CEO Armstrong $60M in 2020 – Including $1.8M for 'Personal Security': That's nearly twice what JPMorgan Chase's Jamie Dimon made and four times what Apple's Tim Cook took home. Just $1 million of Armstrong's compensation was in base salary, $56.67 million in option awards. The remaining $1.8 million was mostly to pay for his security detail. Given how private keys are the most important part of accessing crypto, physical security becomes essential for the person who knows where they are.
- Coinbase Lists Unmasking of Bitcoin's Creator Among Business Risks: Should the pseudonymous creator of bitcoin ever be identified or should his/her/their bitcoin horde ever get moved, the company's business could face risk, it warned. Amusingly, a copy of the S-1 was delivered to Satoshi Nakamoto's Bitcoin address.
- Coinbase: DeFi Could Hurt Us and US Regulations Make It Hard to Fight Back: A more imminent risk to the company's business model is whether customers switch to decentralized finance (DeFi) platforms. Some, such as FTX's Sam Bankman-Fried, don't see that as a threat just yet. Nonetheless, the company listed it as something to keep an eye on, especially as these platforms take off. That doesn't mean Coinbase isn't profiting from the rise in DeFi, though; it has an investment in one of the more popular DeFi platforms, Compound.
- Coinbase Institutional, Retail Trading Volume Grew at Equal Rates in 2020: These days, about two-thirds of the exchange's trades come from institutional investors and one-third comes from retail. That wasn't always the case. Back in 2018, 80% of its business was from the Average Joe crypto trader. That changed in 2019 and by the end of that year, $5 billion came from retail but $9 billion from "institutional" (big investors using Coinbase Pro rather than the app, for instance). Today, $32 billion comes from retail and $57 billion from institutions, a sixfold increase for each segment.
- Coinbase Gave Silicon Valley Bank Stock Warrants for Access to USD Payments: Sure, crypto is all the rage now with Wall Street but back in in the Dark Ages (2014), it was radioactive. Desperate for a way to send and receive U.S. dollars, Coinbase gave Silicon Valley Bank a warrant for 400,000 Class B shares at a little more than $1 per share. "Class B shares have 20 times the voting power of the class A shares that Coinbase is seeking to list on the Nasdaq," noted CoinDesk's Nathan DiCamillio. "However, the Class B shares are convertible at any time, on a one-for-one basis, to class A shares, which presumably would be more liquid once publicly traded."
- Coinbase Calls Out Binance as It Bemoans Compliance Burden: Playing by rules as best as one can in order to go public on U.S. markets comes with a price: specifically, one can't profit from flouting the rules. In the S-1 filing, Coinbase pointed the finger at one rival exchange in particular. "Like a closely monitored child complaining about a sibling who seems to get away with everything, Coinbase called out rival crypto exchange Binance," writes CoinDesk's Ian Allison. What's more, its joint venture with Circle in USD Coin (USDC) is subject to audits by regulators, unlike (until recently) stablecoin giant tether (USDT), a favorite currency on Binance.
Stay tuned to CoinDesk for more news on Coinbase's journey to a public company.
--Lawrence Lewitinn
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BIGGEST MOVERS
These are the biggest movers in the CoinDesk 20 over the past 24 hours:
Gainers:
- Cardano (ADA): +8.46%
Losers:
The CoinDesk 20 filters from the larger universe of thousands of cryptocurrencies and digital assets to define a core group of 20. These assets constitute roughly 99% of the market by volume at eight of the largest and most trustworthy exchanges.
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U.K.-listed Argo Blockchain (LON:ARB) said it has installed 4,500 cryptocurrency mining machines from Celsius Network.
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UK Must Act Quickly to Ensure Fintech Lead, Encourage Crypto: Treasury Report Urges
The U.K. Treasury has released a new report which highlights the need to launch a new regime for the regulation and administration of crypto assets.
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Disclaimer: The information presented in this message is intended as a news item that provides a brief summary of various events and developments that affect, or that might in the future affect, the value of one or more of the cryptocurrencies described above. The information contained in this message, and any information liked through the items contained herein, is not intended to provide sufficient information to form the basis for an investment decision. The information presented herein is accurate only as of its date, and it was not prepared by a research analyst or other investment professional. You should seek additional information regarding the merits and risks of investing in any cryptocurrency before deciding to purchase or sell any such instruments.
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