Litecoin ‘Digital Silver’ Narrative Is Proven Wrong, New Data Shows

The start of 2020 has seen considerable gains in the cryptocurrency market as a whole. Recently, Bitcoin (BTC) price reached a 2-month record high crossing above the $9,000 mark as well as other cryptocurrencies such as Litecoin (LTC) reaching $62.80 which is the highest price seen since mid-November 2018.

Cryptocurrency market weekly overview. Source: Coin360

Cryptocurrency market weekly overview. Source: Coin360

Cryptocurrencies’ volatile behavior is one of the main concerns raised by researchers and it complicates the argument that Bitcoin should be classified as a traditional investment asset and that it is a reliable store of value.

Amid those discussions, Bitcoin has been closely compared to gold, while Litecoin has been associated with being “the silver to Bitcoin’s gold.”

As reported by Cointelegraph, new data suggests that the actual correlation between Bitcoin and gold is not significant, as well as gold’s explanatory power of Bitcoin returns. Nevertheless, Bitcoin is still frequently compared to gold, particularly as a potential safe-haven asset.

Since October 2019, silver prices have approached new record-highs. But does the latest data support the argument that Litecoin is the silver of cryptocurrencies? Could Bitcoin instead of Litecoin be closer to silver than to gold?

Silver prices since October 2019. Source: BullionVault

Silver prices since October 2019. Source: BullionVault

Is Bitcoin or Litecoin price action closer to silver?

Our data — from May 2013 until December 2019 — shows that Bitcoin and Litecoin returns are very positively correlated (0.67) with 1 implying a strong positive correlation and 0 meaning that the assets are not correlated. A reading of -1 shows that the assets are completely inversely correlated.

Meanwhile, the correlation between silver and Litecoin returns is close to zero (0.026), which is similar to Bitcoin’s correlation with silver (0.0025).

We further analyzed the correlation between the lagged silver returns and the two assets. In other words, the correlation between yesterday’s silver returns and today’s Litecoin and Bitcoin returns were compared.

However, the results are even more discouraging, since both show negative correlations with the lagged silver returns. Bitcoin’s correlation was -0.03 while Litecoin’s was -0.05.

April 2013-December 2019 correlation between silver, Bitcoin and Litecoin returns and silver’s lagged returns

April 2013-December 2019 correlation between silver, Bitcoin and Litecoin returns and silver’s lagged returns

Analyzing the rolling correlations provides a wider view and each data point in the diagram above refers to the correlation of silver and Bitcoin returns (BTC/silver), and between silver and Litecoin returns (LTC/silver) over the last 30 days.

One can see that the correlation between Bitcoin and silver, and Litecoin and silver, is very similar across time during both negative and positive periods.

Rolling correlations between Bitcoin/silver, and Litecoin/silver from May 2013-December 2019

Rolling correlations between Bitcoin/silver, and Litecoin/silver from May 2013-December 2019

Hence, both Bitcoin and Litecoin have a small correlation and similar relationship with silver. Thus, the Litecoin as “digital silver” narrative is challenged by these very low correlation values. Moreover, it’s no surprise that Bitcoin has surpassed both Litecoin and silver as the best investment option over the past ten years.

Cumulative Bitcoin, Litecoin and silver returns from investments made between May 2013 and January 2020

Cumulative Bitcoin, Litecoin and silver returns from investments made between May 2013 and January 2020

The relationship between digital assets and commodities from 2018 and 2019

For investors, a closer look at these relationships over the short-term can help draw better insights for future investment strategies. In 2018, the correlation between silver for both assets is slightly higher than the first results from May 2013 to December 2019, albeit still very low. Bitcoin is correlated at 0.05 with silver and Litecoin is correlated at 0.09.

Whereas in 2019, Bitcoin and Litecoin had opposite correlations to silver with Bitcoin and silver correlation being 0.03 and the Litecoin and silver correlation being negative at -0.02. Even the correlation between Bitcoin and Litecoin returns is lower than in other samples (0.74).

Nonetheless, both results are very close to 0, which leads us to believe that the correlation between these assets is not representative enough to draw reliable strategies for investors.

Correlation in 2019 between Silver returns, BTC returns, and Litecoin returns 

Correlation in 2019 between Silver returns, BTC returns, and Litecoin returns 

Is silver a useful predictor of Litecoin and Bitcoin returns?

The data, however, suggests that silver returns may work as a predictor for future Litecoin returns. From the model employed, if silver’s return rose by 1% yesterday, we can expect that Litecoin returns may decrease by -0.232% today. This statistically significant result can lead investors to assume that silver returns may work as a predictor for future Litecoin returns in a negative way. Similar outcomes were not found in the case of Bitcoin, however.

The ability to predict prices has been the holy grail of financial markets, hence the importance of this relationship between returns. Even though both crypto assets show a very low correlation with silver, the results for the lagged returns shed some light on the relationship between silver and future Litecoin returns.

Looking forward, investors may want to look at silver returns to draw strategies when buying/selling Litecoin based on this past silver return’s analysis. However, any strategy has to consider the fast-changing crypto market environment and careful analysis over different time periods, which can cause different conclusions.

Nevertheless, these findings can help us to conclude that Litecoin as the digital equivalent of silver is far-fetched due to the low correlations. However, we do highlight the value of investigating the digital silver narrative by establishing a new connection between returns, which is crucial for investors.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.

Source Cointelegraph

Facebook’s Libra Pushed World to Reconsider USD as Global Reserve Currency: WEF

Major global economists credit Facebook’s Libra with pushing the world to start reconsidering the United States dollar as anchor currency.

At a Jan. 23 panel at the annual World Economic Forum (WEF) in Davos, officials and financial experts discussed one of the most important mechanisms in the global financing system — the U.S. dollar, which has become the world’s reserve currency.

Libra evoked a future digital currency

Called “Challenging the Dominance of the Dollar,” the panel focused on factors that make the U.S. dollar the world’s dominant payment system and reserve currency, as well as the fact that countries over the globe are trying to reduce their dependency on the dollar.

The panel featured a number of officials including Brazil’s Economy Minister Paulo Guedes and Gita Gopinath, chief economist at the International Monetary Fund (IMF). Hosted by Adam Tooze, director of the European Institute at Columbia University, the panel also included Portugal’s Finance Minister Mario Centeno and Zhu Ning, a professor of finance at Tsinghua University.

Gopinath, who is also a director at IMF’s research department, opened the panel with comments that named Facebook’s cryptocurrency initiative Libra as a major factor that made everyone in global finance reconsider the status of the dollar as anchor currency.

Brazil’s Economy Minister supported the statement, adding that new technologies like blockchain are paving the way for future currency that will be digital:

“So then there is the new technology, the digital, the blockchain. […] The Libra episode is just evoking a future digital currency.”

U.S. dollar is still attractive

Gopinath continued the U.S. dollar still remains attractive, pointing out that one of the most important features that make the U.S. dollar attractive is trust and stability:

“Why is it that the dollar has such dominance? It does because it is the currency that provides the best stability and safety. […] It makes complete sense to hold your value in dollars because if things go bad, it gains value.”

Digital currency initiatives trigger changes in the global financial system

The fact that WEF economists now agree that Facebook’s Libra has pushed global authorities to start reconsidering their approach to the world’s reserve currency, is definitely reinforcing the status of emerging fintech technologies as well as blockchain.

Meanwhile, some officials have already warned that projects like Libra can have a huge impact on the U.S. dollar. In August 2019, Mark Carney, the governor of the Bank of England, suggested that Libra-like digital currency could replace the U.S. dollar as the world’s reserve currency. Carney said that replacing the dollar with a digital currency would be a better option than allowing its reserve status to be replaced by another national currency such as China’s renminbi.

As reported by Cointelegraph, Libra initially proposed to back its crypto project by several national currencies including the U.S. dollar, euro, Japanese yen, British pound and Singapore dollar, allegedly excluding the Chinese yuan from the group of reserve assets.

Source Cointelegraph

The Problem of Global Unbanked Is “Unacceptable”

At the World Economic Forum panel discussing digital currencies, the conversation topics included Central Bank Digital Currencies (CBDCs). Calibra’s David Marcus highlighted that regardless of the nature of digital currency, these discussions are key to innovate cross-border payments and solve the issue of the unbanked.

Retail CBDCs for consumer access

Benoît Coeuré, head of the Bank of International Settlements’ Innovation Hub, revealed that as many as 80 percent of worldwide central banks are interested in CBDCs, primarily of the retail variety.

Marcus explained the difference between “retail” and “wholesale” CBDCs:

“Central banks could distribute the CBDCs in two possible ways. One is wholesale CBDCs, so through existing banks and the banking system, or retail going straight to consumers.”

However, Marcus argued that wholesale CBDCs make little sense in the context of the existing ecosystem, as citizens would be a further step removed and central banks themselves would not benefit from the change. He elaborated:

“The big question is, if you’re actually targeting wholesale distribution to banks, then what problem are you solving? You could probably have some efficiency gains, but banks currently have windows. The Fed, the ECB, they’re quite functional.”

He raised further concerns as to whether banks are technologically equipped to handle retail CBDCs, and the issues they would give to retail banks. He concluded by noting that there are “interesting hybrid models” whose development could solve some of the key issues outlined.

Efficient cross-border payments

As a proponent of a global currency not backed by specific states, Marcus went on to elaborate on the ultimate purpose of digital currencies:

“When we started this journey almost six months ago, the whole idea was not around a certain way of doing things, but more around [coming] together and [trying] to figure out how we solve a problem that is unacceptable — 1.7 billion people who are currently unbanked, another billion underserved.”

He pointed out the progress seen in telecommunications, where expensive international calls were replaced by internet-based communication apps. Marcus then continued:

“The same hasn’t happened with money. Some of the networks are 50 years old, the web is 30 years old. We still don’t have an easy, cheap, efficient way for people to have access to digital money and move it around. Personally I’m really excited that we’re having all these conversations now.”

Source Cointelegraph

Crypto Exchange Liquidity and Why It Matters, Explained

The pure frequency of discussions concerning liquidity indicates its importance to financial markets, but what gives it that import? The definition itself (the ease with which one can exchange an asset for cash without affecting the price of that asset) is a great place to start.


The more liquid a market is, the more stable it is. When buying or selling Bitcoin, there are always plenty of traders on the other side willing to fill the order with minimal impact on the asset’s price. A less liquid, more obscure altcoin, however, is likely to have its price affected by a large trade. To execute a large trade, you’ll likely have to move through the order book, ultimately increasing the bid ask spread and raising or lowering the overall price of the asset. In this case, not only does the trader experience high slippage, but the asset itself is seen to be more volatile over time. A more liquid asset is more stable on an individual trade as well as on the market as a whole over time.

Manipulation resistant

They don’t call crypto the Wild West for nothing. With pseudonymous players from all around the world and little regulatory framework, crypto markets have a long history of price manipulation. But the lack of accountability is only half of the story; equally important is the liquidity environment that can make manipulation all too easy. An illiquid market can allow a single large actor or group of actors to manipulate the price for their benefit, while more liquid assets and exchanges are much more resistant to this kind of manipulation.

Transaction time

With higher liquidity and more traders, orders get filled much faster than low liquidity environments. While this is obviously convenient and a better user experience, it is also advantageous for higher frequency traders. Particularly in times of high volatility, being able to enter and exit a position quickly can make a serious impact on profits.

Technical analysis

Whatever your personal belief in the accuracy of technical analysis, it is a widespread strategy in the crypto markets. For those employing the technique, higher liquidity markets can help increase accuracy. With the tighter spreads and greater stability liquidity brings, price and charting formation is more developed and precise. In low liquidity environments, where large trades can significantly impact price, chart formation is more likely to be skewed by outliers than in healthier markets.

Source Cointelegraph

Blockvest Saved from Default Judgement in Fraud Case

Blockvest, which is currently embroiled in a dangerous lawsuit with the SEC, obtained a small victory in a similar case filed by an elderly couple. However, the Jan. 21 court filing suggests that this is based on a legal technicality.

The case against Blockvest was filed by Tommy and Christine Garrison, who alleged that the project violated securities law and regulations, and engaged in unlawful business conduct and financial elder abuse.

The couple had filed the case against Rosegold Investments and Master Investment Group, the companies behind the project. They also cited Reginald Buddy Ringgold, III, aka Rasool Abdul Rahim El, as a defendant.

Ringgold filed an answer for himself, while the companies failed to respond to the lawsuit and were put in default liability on Sep. 25, 2019, due to lack of opposition.

On Jan. 21 the court vacated the default judgement.

Ringgold still in trouble

Court filings revealed that the rationale for the retraction was the fact that all three entities were closely related. Ringgold is the founder and managing director of both companies, but he was not part of the default judgement. Blockvest may still be in trouble if it does not successfully defend itself.

This may be tricky, as the project has recently been accused by the Securities and Exchange Commission to have falsified key evidence. The commission motioned for a default judgement due to sanctions, which is yet to be granted. Both cases accuse Blockvest of violating securities regulation, meaning that a loss in one case would likely lead to the same in another.

Blockvest ran a $2.5 million pre-initial coin offering before being restricted by the SEC. While the court initially took its side, the decision was later reconsidered.

Source Cointelegraph

Pornhub Adds Tether Stablecoin as New Crypto Payment Option

Adult entertainment website Pornhub has added a new cryptocurrency payment option after PayPal had abruptly stopped servicing its models in late 2019.

According to a Jan. 23 blog post, Pornhub now supports Tether (USDT) — a major United States dollar-pegged stablecoin — to allow instant and zero-fee payments via the crypto wallet and browser extension TronLink.

Pornhub supports Tron-based USDT

TronLink is a native wallet for Tron (TRX), the 12th largest cryptocurrency by market cap that is backed by the Tron Foundation. The USDT token became available on the Tron network after Tether and the Tron Foundation partnered and released the first Tron-based USDT tokens in April 2019.

In order to start sending and accepting payments in Tether, Pornhub models download the TronLink wallet app that is available both on Apple Store and Google Play, Pornhub noted. Alongside Tether, Pornhub is also now supporting a new payment processor known as Cosmo Payment.

Tron CEO Justin Sun subsequently commented about the news on Twitter, saying that the new crypto payment option is a good way to support “victims of centralized payment platforms like PayPal.”

PayPal halted its service for Pornhub due to alleged payment permission violations

The news comes after PayPal, one of the world’s biggest online payment processors, halted its payment support for Pornhub models in mid-November 2019. According to reports, PayPal stopped doing business with the site because Pornhub purportedly made some payments without its permission.

Following the news, the crypto community made a push for major cryptocurrency Bitcoin (BTC) as a new payment option on Pornhub. Meanwhile, Pornhub models were reported to have a lack of general knowledge of cryptocurrency, with some models noting that they did not know what crypto is.

Porn pushing crypto adoption?

Pornhub has been gradually working on promoting crypto use on its platform. In August 2019, the adult entertainment streaming website partnered with cryptocurrency payment and billing startup PumaPay to enable user payments in crypto.

Back in 2018, the adult entertainment website partnered with cryptocurrency Verge (XVG) to accept the coin as payment for Pornhub Premium and all Pornhub purchases. As reported by Cointelegraph, Verge’s price skyrocketed just after PayPal’s decision to pull the plug on Pornhub in November.

Source Cointelegraph

Apple’s iCloud Is “Now Officially a Surveillance Tool”

Pavel Durov, founder and CEO of major encrypted messenger Telegram, argues that Apple’s cloud service iCloud is “now officially a surveillance tool.”

Citing a Jan. 21 Reuters report, Durov claimed that applications like WhatsApp — which rely on iCloud to store private messages — are “part of the problem.” Telegram CEO delivered his verdict in a post on his official Telegram channel on Jan. 21:

“iCloud is now officially a surveillance tool. Apps that are relying on it to store your private messages (such as WhatsApp) are part of the problem.”

Apple dropped its end-to-end encryption plans for iCloud two years ago

Specifically, Durov’s post refers to a report claiming that Apple dropped its long-running plans to allow iPhone users to fully encrypt backups of their devices in the iCloud. According to Reuters, the tech giant has given up its end-to-end encryption plans after the FBI complained that such a feature would harm investigators. Citing six anonymous sources familiar with the matter, the report notes that Apple had to drop its plans two years ago, but the issue has not been reported previously.

While Apple has reportedly shifted its focus to protecting some of the “most sensitive user information” like saved passwords, backed-up texts from iMessage, WhatsApp and other encrypted services remain available to Apple employees and authorities, Reuters wrote.

The news comes after President Donald Trump blasted Apple in a Jan. 14 tweet, arguing that the company “refuses to unlock phones used by killers, drug dealers and other violent criminal elements.”

Telegram has been resisting regulatory anti-privacy pressure

As Telegram positions itself as a global fighter for privacy, opposing major tech giants like Facebook and Google, Durov’s recent claims reinforce the company’s focus on ensuring “real privacy.” Launched in 2013, Telegram is a cloud-based messenger that aims to provide secure encryption, protecting users from third parties such as marketers, advertisers and officials.

Given its strong desire to provide the global community with tools to protect from the eyes of Big Brother, Telegram has already encountered some regulatory issues so far.

After Telegram refused to hand over the encryption keys to user accounts to the Russian authorities in 2018, the country’s major internet monitoring organization Roskomnadzor declared that the app will be blocked “in the near future.” Despite subsequent multiple efforts to ban access to the messenger, Telegram was still operational at the time, and still remains accessible in the country to date.

Previously, Iranian authorities similarly tried to block Telegram amid nationwide protests after the firm refused to shut down some “peacefully protesting channels.” Despite multiple bans, some government agencies including state-run authorities were reportedly using Telegram as of April 2019.

Source Cointelegraph

Price Analysis Jan 22: BTC, ETH, XRP, BCH, BSV, LTC, EOS, BNB, XLM, ADA

Price Analysis Jan 22: BTC, ETH, XRP, BCH, BSV, LTC, EOS, BNB, XLM, ADA

Source Cointelegraph

Libra Spurred Us to Take CBDCs Seriously

The former head of payments and settlements at the Bank of Japan (BOJ) says Facebook’s Libra galvanized central banks globally to look seriously into digital currency issuance.

A Jan. 22 Reuters report cited remarks by Hiromi Yamaoka, who reportedly oversaw the BOJ’s research into digital currencies as part of his erstwhile role and continues to communicate closely with international central bank policymakers. 

He is presently a board member at IT consultancy firm Future Corp.

The private-public debate

As reported yesterday, the central banks of Canada, the United Kingdom, Japan, European Union, Sweden and Switzerland have just announced their creation of a group together with the Bank for International Settlements (BIS) to jointly study central bank digital currencies (CBDC). 

Their initiative is symptomatic of increased private-public competition in determining the future of money, Yamaoka implied:

“The latest decision is not just about sharing information. It’s also an effort to keep something like Libra in check […] Major central banks need to appeal that they, too, are making efforts to make settlement more efficient with better use of digital technology.”

While projects such as Libra up the pressure on financial institutions to lower the costs of transactions, they also raise more fundamental questions about nation states’ control over currency issuance. 

Yet Yamaoka raised concerns both about central banks potentially stifling private-sector innovation, and of the benefits of using CBDCs to enhance the effectiveness of central bank measures:

“In the world of central bankers, the idea of using CBDCs to enhance the effect of monetary policy seems to have subsided somewhat. There are increasing doubts about the effect of negative interest rates as a policy tool. If so, do you want to issue CBDCs for the sake of deploying a policy with questionable effects?”

Most immediate is the pressure on central banks to survive the race for greater convenience and diversity in global payments and settlements. 

This diversity, rather than complementing institutions’ policy goals, is instead perceived by those who keep a tight rein on the present global system — most notably the Federal Reserve — as something to be checked, not embraced:

“If you want to make monetary policy effective, you need to ensure people keep using the currency you issue.”

The Bank of Japan and blockchain

As reported, the BOJ and Project Stella at the European Central Bank (ECB) have jointly conducted research into the potential use of blockchain technology to assume a key role in tackling institutional banking challenges. At the time of the project’s close, 2017, both concluded the technology had not sufficiently matured.

In fall 2019, the governor of the Bank of Japan warned of the prospectively “huge impact” Libra could have on society and stressed that international cooperation is of paramount importance as regards its regulation.

Source Cointelegraph

British Telecoms Giant Latest Member to Bail on Libra Association

Adding to a lengthy list of departures last fall, telecom giant Vodafone has departed the Libra association, a spokesperson from Vodafone confirmed to Cointelegraph in an email on Jan. 21, 2020. 

The representative said:

“Vodafone Group has decided to withdraw from the Libra Association. We have said from the outset that Vodafone’s desire is to make a genuine contribution to extending financial inclusion. We remain fully committed to that goal and feel that we can make the most contribution by focusing our efforts on M-Pesa. We will continue to monitor the development of the Libra Association and do not rule out the possibility of future co-operation.”

M-Pesa is an African mobile payment option developed by Safaricom, a Kenya-based outfit Vodafone collaborates with.

Libra remains unshaken

Cointelegraph also received a statement from the Libra Association on Jan. 21 regarding the telecom’s departure. “We can confirm that Vodafone is no longer a member of the Libra Association,” Dante Disparte, head of policy and communications for the Libra Association, said in the statement. 

“Although the makeup of the Association members may change over time, the design of Libra’s governance and technology ensures the Libra payment system will remain resilient,” Disparte added. “The Association is continuing the work to achieve a safe, transparent, and consumer-friendly implementation of the Libra payment system.”

Vodafone joins other exits

Almost immediately after Facebook released the white paper for its Libra digital asset, the project came under regulatory fire, ultimately stalling the project’s progress. 

In the latter part of 2019, many mainstream giants decided to leave the Libra Association, the main entity behind the digital asset. 

In October 2019, Cointelegraph reported on several high profile departures from the association, including Visa, Mastercard, eBay and PayPal.

Source Cointelegraph