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Market Wrap: Here’s Why Ether’s Price Has Jumped 65% So Far This Year

While bitcoin (BTC) is often discussed as the cryptocurrency best suited for turbulent times, the price of ether (ETH), the second-largest digital asset by market capitalization, has been substantially outperforming bitcoin since the start of 2020. But ether has much different technical dynamics to consider than bitcoin.

As of 20:00 UTC (4 p.m. ET), ether was trading at $211, a loss of less than a percent over the past 24 hours. The native cryptocurrency of the Ethereum network was close to its 10-day moving averages, a technical indicator signaling sideways trading, with little price movement. Ether dropped as low as $209 earlier in the day on exchanges such as Coinbase, then hit $215 at 11:00 UTC (7 a.m. ET). 

ethmay19
Ether trading on Coinbase since May 17
Source: TradingView

Amid the recent hype about the halving, a once-in-four-years event that reduced the supply of bitcoin and the proclamations of investors like Paul Tudor Jones II that bitcoin is a good investment in an extraordinary economic era, ether’s price has outperformed it. For the year to date, ether is up a whopping 65% while bitcoin has risen 35% for the same period. 

performance-of-btc-and-eth-since-2020
Ether vs. bitcoin price since 1/1/20
Source: CoinDesk Research

A much smaller market capitalization for ether likely helps ignite larger price movements versus bitcoin, says Vishal Shah, a cryptocurrency options trader. “ETH’s materially smaller market-cap, on a nominal basis, thus benefits on the margin.” Ether currently has a $23 billion market capitalization versus bitcoin’s $144 billion, according to data from CoinGecko. 

“Ether has long been tracking bitcoin’s price action, albeit with higher beta. This means that when bitcoin surges in value, ether’s value usually increases as well by an even greater percentage,” said Michael Anderson, co-founder of Framework Ventures. 

Anderson’s firm Framework is focused on decentralized finance, or DeFi, investments. DeFi uses the Ethereum network for various cryptocurrency services such as stablecoins, lending and derivatives. 

Read More: The Government Won’t ‘Kill DeFi’ but FATF Might Compromise Anonymity

The prospect of decentralized financial applications helps fuel interest in ether as an investment, says Danny Kim, head of revenue for cryptocurrency liquidity provider SFOX. “To the extent that ether is outperforming bitcoin and becoming a more active network, a big factor to consider is the DeFi sector,” he told CoinDesk. 

Ether holders can “lock” the cryptocurrency into a DeFi smart contract address to gain yields on various lending and stablecoin applications on the network. Locking ether into DeFi effectively reduces the supply of ether in circulation for trading, a dynamic that reduces liquidity. “DeFi has become incredibly popular, and large portions of ETH are getting locked up as collateral, removing them from the liquid market,” said Framework’s Anderson. 

Indeed, at one time, ether users had locked up over 3.2 million ETH in network smart contracts this year, although that number is down from February highs, according to data analytics firm DeFi Pulse. There are nearly 111 million ETH outstanding. 

ethdefi
Amount of ether in DeFi smart contracts the past year
Source: DeFi Pulse

Nonetheless, traders still prefer bitcoin’s liquidity, regardless of ether’s year-to-date performance. While ether has $42 million in daily volume on spot exchange Coinbase, bitcoin’s volume is almost three times higher, averaging $125 million on the San Francisco-based trading platform. Thus, traders have to carefully balance ether’s profit potential with the fact that its order books are thinner than bitcoin, which can lead to slippage and potential losses when price makes huge swings. In addition, the Ethereum network is planning to go through an ambitious technical transition, Eth 2.0, creating a degree of uncertainty. 

Read more: ErisX Announces Launch of First US Ether Futures Contracts

Sweden-based over-the-counter trader Henrik Kugelberg, is bearish on ether and believes that while Ethereum is the DeFi leader for now, that could easily change. “I have a feeling Ethereum is a giant on clay feet. They have a very hard time agreeing on real important stuff and the technology really needs to move along,” he said. 

“Ethereum, in my eyes, is at a much greater risk of being bypassed [by another cryptocurrency] than bitcoin.” 

Other markets

Digital assets on CoinDesk’s big board are mostly down Tuesday. Bitcoin lost less than a percent in 24 hour trading, priced at $9,663 as of 20:00 UTC (4:00 p.m. ET). 

“We’ve seen some bitcoin halving effects in the past few days as hashrates have begun falling off sharply and transaction fees rising in tandem, but nothing really having any effect on price thus far,” Singapore-based crypto quantitative fund QCP Capital wrote in an investor note Tuesday morning. 

btcmay19
Bitcoin trading on Coinbase since May 17
Source: TradingView

The biggest losers in 24-hour trading are bitcoin gold (BTG) dropping 1.8%, nem (XEM) in the red 1.1% and neo (NEO) slipping 1.1%. The lone cryptocurrency substantially gaining on the board today is cardano (ADA) in the green 2.7%. All price changes were as of 20:00 UTC (4:00 p.m. ET) Tuesday.

Read more: Bitcoin’s Impending Golden Cross May Bolster Bulls: Analysts

In commodities, oil is dropping Tuesday, with the price for a barrel of crude down 1% as of press time. Gold traded flat, with the yellow metal gaining less than a percent and at $1,745 at the close of New York trading. 

goldmay19
Contracts-for-difference on gold since May 15
Source: TradingView

In Asia, Tokyo’s Nikke 225 of the largest companies by market capitalization in Japan closed trading up 1.4%, with the index hitting a two-month high on optimism of a coronavirus vaccine. 

The FTSE Eurotop 100 index closed the day down less than a percent. In the U.S. the S&P 500 lost 1% on the day, although still up 2% on the week after a big 3% rally on Monday. U.S. Treasury bonds backed off on Tuesday. Yields, which move in the opposite direction as price, were all down with the two-year bond slipping most, down 12%.

Disclosure Read More

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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News Veterans Today

Pakistan: Removal of Diplomat Jumped on by India – Veterans Today

                         By Sajjad Shaukat for Veterans Today

Surprisingly, Pakistan’s media did not give much coverage to the removal of country’s diplomat from service and manipulation of the issue by the Indian media at this critical hour when top officials of the Indian extremist Prime Minister Narendra Modi-the leader of the fanatic ruling party BJP and their media leave no stone unturned in maligning Pakistan through a continuous blame game in relation to any matter such as violations of the Line of Control (LoC), COVID-19 pandemic and so on.

However, Government of Pakistan maintains strict discipline on its servants and expects them to display high moral character on official duties. In this regard, Ministry of Foreign Affairs is a yard extra careful and keeps strict eye on its functionaries posted in the missions abroad.

In similar vein, Mr Waqar Ahmed, a BPS 18 Foreign Services of Pakistan diplomat posted in Pakistan’s embassy in Kyiv, Ukraine, as First secretary was under observations for the acts falling below the dignity of his post.

According to the statement of Foreign Office, “he was charged with gross misconduct, conduct unbecoming of an officer and gentleman and conduct prejudicial to good order and service discipline”. He has also been charged with sexually harassing a local cleaner/messenger, abuse of authority, creating a hostile environment and unlawful termination of a local employee.

After having found him guilty of the charges the diplomat has been removed from the Service with immediate effect on the orders of the Foreign Secretary on May 5, 2020, under the Government Servants (Efficiency and Discipline) Rules, 1973.

Nevertheless, the action against the diplomat is purely routine matter and reflects strict regulations the Government of Pakistan maintains about its officials.

But, the Indian media, famous for its absurd reporting has found the issue interesting enough for manipulation. Misinterpreting the fact, the Indian media has reported that the officer as belonging to the Inter-Services Intelligence (ISI)—the primary intelligence agency of Pakistan, thus, using it as a pretext to spit venom against ISI.

Here, question arises, who can forget very funny Indian media reporting about ISI, which failed to remember their star spy master serving Navy commander Kulbhushan Yadav who was arrested red handed, while involved in terror activities inside Balochistan province of Pakistan.

As far as foreign diplomats are concerned, a serious diplomatic row between the United States and India appeared on January 9, 2014 after a high-tension drama resulted in the effective expulsion of an Indian diplomat Devyani Khobragade from the US. Devyani Khobragade, the former deputy consul general of the Consulate General of India in New York City, who was charged by the US authorities with committing visa fraud and providing false statements in order to gain entry to the US for Sangeeta Richard, a woman of Indian nationality, for employment as a domestic worker. The diplomat was additionally charged with failing to pay the domestic worker a minimum wage. The situation got to the point that the Indian diplomat was arrested by the US federal law enforcement authorities, and even subjected to a strip search. Her arrest and treatment received much attention of the international media.

Similarly, in September, 1999, another major scandal involving an Indian diplomat centered on an Indian Foreign Service (IFS) officer who was married into the family of then chief minister of West Bengal Jyoti Basu and posted in Switzerland came to the limelight. The Indian diplomat Emanuel Barua was hastily moved to the Indian consulate in Birmingham after he was alleged to have ill-treated his maid, while he was posted in Geneva. The allegations against Barua were also raised by the Committee Against Modern Day Slavery, the organisation which also accused the Indian diplomat of sexually abusing and mutilating his maid, Lalita Oraon.

Likewise, in October, 1999, similar charges were also made against Amrit Lugun, a first secretary at the Indian embassy in Paris.

It is notable that Indian media in its twisting reporting to defend the various abusive cases of Indian diplomats said regarding a scandal that only medical investigation will ascertain when Lalita Oraon was wounded-if it had happened in her village in Bihar, it would probably have gone unnoticed. But, when 19-year-old Lalita Oraon, lying badly injured on a hospital bed in Paris, told her story it threatened to kick up a major diplomatic row.

In this connection, the non-governmental organisation is known in Europe by its French acronym, CCEM. It is the campaign by the CCEM against Barua and, now, against Amrit Lugun, a first secretary at the Indian embassy in Paris, which has persuaded the Indian government that Lugun is the victim of a frame-up by the NGO.

It is mentionable that in another huge embarrassment, the Indian government accused one of its diplomats of handing secrets to ISI in 2010. Madhuri Gupta, a 53-year-old second secretary at its Islamabad High Commission, had been charged with espionage. Gupta, who had worked in the press and information section for three years, was arrested after being called back to New Delhi on the pretext of discussing a regional summit in Bhutan.

In this context, in an official statement, Vishnu Prakash, the then spokesman for India’s ministry of external affairs had pointed out at that time: “We have reasons to believe an official in the Indian high commission in Pakistan has been passing information to Pakistani intelligence officials.” While, Indian renowned news agency, Press Trust of India had reported that the then head of India’s intelligence agency Research and Analysis Wing (RAW) in Islamabad was also under investigation ‘on similar charges’.

Nevertheless, it is expected that these few events into the professionalism and credibility of Indian diplomats will prove to be a good food for thought for New Delhi as well as their media which is hell bent on negatively twisting even a routine matter of the removal of the Pak diplomat from service. Instead of manipulating the issue to fulfill their anti-Pakistan agenda and sinister designs against Islamabad, including ISI, India should puts its own house in order first by paying attention to the abuses and clandestine activities of the Indian diplomats.

Sajjad Shaukat writes on international affairs and is author of the book: US vs Islamic Militants, Invisible Balance of Power: Dangerous Shift in International Relations

Email: [email protected]

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