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Blockchain Firm Chainalysis Is Adding Bitcoin To Its Balance Sheet

Chainalysis has announced that it plans to add bitcoin to its balance sheet. The news came as a surprise to crypto investors as it is usually expected that a firm so deeply ingrained in the blockchain technology ecosystem would own some crypto. According to the blog post on its website, the firm had previously not owned any cryptocurrencies and this will be the first time Chainalysis is purchasing BTC.

Bitcoin has been purchased as an investment strategy by companies who are in and out of the blockchain space. The digital asset presents an alternative means of investment for people who want to have total control of their assets. With its recent purchase, Chainalysis joins the ranks of companies who are holding BTC for the long term, according to statements on the post.

Chainalysis Takes The Leap With Bitcoin

Chainalysis revealed in the post that it was buying bitcoin to put on its balance sheet. The company which is valued at $4.2 billion will put the purchased BTC in its corporate investment portfolio and intends to hold for the long term.

Related Reading | Number Of Bitcoin Whales On The Rise As BTC Chases New All-Time High

The company provides valuable software analysis software that helps exchanges comply with regulations. Its software is also used to assess risk and identify illegal activities that are being carried out on the blockchain, helping law enforcement to track the perpetrators.

Co-founder and CEO of Chainalysis, Michael Gronager, said, “Chainalysis is laser-focused on its commitment to building trust in cryptocurrency as a digital asset and we are thrilled to be adding bitcoin on our corporate investment portfolio.” Speaking on this being the first cryptocurrency purchase on the part of the firm, Gronager added, “This is Chainalysis’ first acquisition of cryptocurrency, and we will continue to pursue other digital assets as potential future investments.”

BTC surges past $64K | Source: BTCUSD on TradingView.com
Partnership With NYDIG

In order to purchase and custody the bitcoins, Chainalysis had expanded its partnership with bitcoin technology and financial services firm NYDIG. Both firms have been working together since they announced that Chainalysis would be NYDIG’s compliance technology partner in 2018. The BTC was purchased through the financial services firm and NYDIG will custody the digital assets on behalf of Chainalysis.

Related Reading | Strike Launches New Feature To Allow Users Convert Salaries To Bitcoin

“Our expanding partnership with Chainalysis is a mutually beneficial relationship. Chainalysis has long been building trust in the digital asset ecosystem, and this investment shows their belief that bitcoin is a sound investment for the future. We are happy that they trusted our platform to safeguard their assets.” – Nate Conrad, Head of Asset Management, NYDIG

The acquisition highlights Chainalysis’ long-standing faith in BTC as a long-term investment strategy. Bitcoin has been a profitable investment venture for companies that have invested in the digital asset in the past and Chainalysis stands to profit from the asset’s growth in the future.

Featured image from Bitcoin News, chart from TradingView.com

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The People’s Bank of China Blasts Bitcoin And Crypto. Once Again.

For a minute there, it seemed like the FUD was over. The People’s Bank of China contributes to its country’s crypto-crackdown at the “Financial Knowledge Popularization Month,” People’s Daily Online reports from Beijing. Speaking at an event, Yin Youping, Deputy Director of the Financial Consumer Rights Protection Bureau of the People’s Bank of China, claimed: 

“We remind the people once again that virtual currencies such as Bitcoin are not legal tender and have no actual value support.” 

Related Reading | “The Death Of China’s Bitcoin Mining Industry,” 7 Takeaways From The Article

Furthermore, Yin Youping classified all cryptocurrency-related investments as pure speculation. He advised the public to “consciously stay away” from virtual assets to avoid unnecessary risk, and to “protect their “pocket.” Nothing crazy coming from a fiat-fuelled bureaucrat. Nevertheless, an interesting new piece in China’s crypto-puzzle.

Disclaimer: This article used Google-Translated quotes and information. Small inconsistencies are a possibility. 
What Else Did The People’s Bank Of China Said?

Besides contributing to China’s crypto-crackdown, Yin Youping responded to the “rebound” in cryptocurrency trading in his country. The People’s Bank of China will:

  • Work overtime to “detect overseas exchanges and domestic traders.”
  • Block “trading websites, apps, and corporate channels.”
  • Intensify “policy publicity,” to let everyone in China know the law of the land. 
  • Establish “a normalized working mechanism” and continue to crack down on cryptocurrency transactions. 
  • Maintain “a high-pressure situation.”

The People’s Bank of China’s aim is pretty clear. And it seems to be working, Youping claimed that “the popularity of virtual currency trading has dropped significantly.” The Deputy Director also encouraged the general public to report “illegal fund-raising crimes” to the relevant authorities.

BTC price chart for 08/27/2021 on Bitstamp | Source: BTC/USD on TradingView.com
Does This Offer Insight Into China’s Crypto Strategy?

In a thread summarizing the case, Chinese journalist Colin Wu gave us inside information that wasn’t part of the article. “By blocking exchanges and strengthening policy publicity, China’s popularity has dropped significantly.”

3. By blocking exchanges and strengthening policy publicity, China's popularity has dropped significantly4. Crack down on illegal fund-raising activities with virtual currency and blockchain.

— Wu Blockchain (@WuBlockchain) August 27, 2021

One of the surprising revelations from Chainalysis’ Global Crypto Adoption report is that P2P trading “declined dramatically” in China. At the time, we naively asked: 

Why are Chinese people abandoning P2P trading so radically? Wouldn’t the “government crackdowns on cryptocurrency trading” cause a surge in old P2P trading instead?

This “high-pressure situation” that the People’s Bank of China maintains might be the answer to both questions. As we learned, both  “the popularity of virtual currency trading” and “China’s popularity” dropped significantly. China’s cracking down on the general population as much as on their biggest industries. Bloomberg tried to explain their moves by defining the “New China Model” as:

If China is abandoning the Silicon Valley model, what will it replace it with? Insiders suggest it will be less founder-driven and more China-centric.

Related Reading | China Banned Bitcoin Mining. What Happens To Small Hydropower Stations Now?

We finished that article with more questions than answers. From “Why is China dwarfing its biggest industries and players? Is the “China Model” just concerned with scale?” To “Is their crackdown on Big Tech even related to their crackdown on Bitcoin mining?“ And concluded:

There’s only one thing we can know for sure: China’s making big coordinated moves when it comes to tech. And they seem to have a plan.

Maybe their plan is simpler than we thought. It’s possible that The People’s Bank of China is just going to make it really really hard for the common citizen to access Bitcoin. And, China’ll use propaganda and repetition to keep people in check and scared of the unknown. One of Bitcoin’s prototipical adversarial scenarios. A battle that Bitcoin expected sooner or later.

Featured Image by Bruce Röttgers on Unsplash – Charts by TradingView

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Chainalysis Report Reveals Crypto Has Gone “Global” In 2021

The blockchain is an immutable record. Companies like Chainalysis make a living out of interpreting that data, extracting value and insights from the numbers. And on-chain analysis reveals that crypto is now “a truly global phenomenon.” The data comes from Chainalysis’ 2021 Global Crypto Adoption Index. The people that really need crypto, qualified as “emerging markets” in the paper, are increasingly involved in the space.

Related Reading | Crypto Company Circle Seeks To Become Global Digital Currency Bank

In The Weekly Update, our friends at Arcane Research found this to be the headline:

“Chainalysis further ranked the countries with the highest crypto adoption following their methodology. A majority of the countries featuring at the top 20 list are emerging market economies.” 

And clarifying their intention, Chainalysis’ paper itself starts with:

“While the professional and institutional markets are crucial, we want to highlight the countries with the greatest cryptocurrency adoption by ordinary people, and focus on use cases related to transactions and individual saving, rather than trading and speculation.”

That being said, we have to talk about…

BTC price chart on Bitstamp | Source: BTC/USD on TradingView.com
What Was Chainalysis ’ Methodology? 

The company focused on “cryptocurrency adoption by ordinary people,” so they weighted everything by purchasing power parity per capita. They ranked “all 154 countries” according to three metrics:

  1. On-chain cryptocurrency value received, weighted by purchasing power parity (PPP) per capita.
  2. On-chain retail value transferred, weighted by PPP per capita.
  3. Peer-to-peer (P2P) exchange trade volume, weighted by PPP per capita and number of internet users.

It’s worth clarifying that in that third one, they “rely on data supplied by two of the largest P2P platforms operating — LocalBitcoins and Paxful — to calculate each country’s P2P trade volume.” Because, for the most part, P2P trading isn’t reflexed on-chain. Chainalysis admits that “While this means that we aren’t capturing all P2P value, we believe these two exchanges are popular enough for their metrics to act as an overall approximation.”

DeFi Is Not Part Of The Studio. DeFi Stats Coming Soon

It’s also worth noting that, “Transactions carried out by DeFi protocol users all show up on-chain, as no centralized service ever takes custody of users’ assets.” That presented a problem, because it “skewed” their rankings “toward countries with comparatively more DeFi users.” So, Chainalysis decided to leave DeFi stats out of this particular studio.

However, they promise. “We also decided to create a new DeFi Adoption Index, which will be available in the coming weeks.”

Global Crypto Adoption Index 2021 | Source: Arcane Research
Chainalysis Identified Three Key Trends

On-chain analysis reveals that:

  • Global cryptocurrency adoption is skyrocketing

This might sound like an obvious claim, but the surprising thing is the staggering numbers. 

“At the end of Q2 2020, following a period of little growth, total global adoption stood at 2.5 based on our summed up country index scores. At the end of Q2 2021, that total score stands at 24, suggesting that global adoption has grown by over 2300% since Q3 2019 and over 881% in the last year.”

  • Adoption in emerging markets grows, powered by P2P platforms

Not everyone has access to a globally accepted bank account. The people who don’t have access to centralized exchanges found a way to participate in the crypto space. And are doing it in a major way. 

  • China and the U.S. dip in our rankings

Not surprisingly, “analysis shows how far P2P volumes have fallen in the two countries compared to worldwide volumes.” However, according to Chainalysis, further considerations indicate that:

“This activity may reflect increasing professionalization and institutionalization of cryptocurrency trading in the United States, and in China’s case may be related to ongoing government crackdowns on cryptocurrency trading.” 

Why are Chinese people abandoning P2P trading so radically? Wouldn’t the “government crackdowns on cryptocurrency trading” cause a surge in old P2P trading instead?

Related Reading | Chainalysis: 2020 Is The Year of The Institutional Bitcoin Investor

In any case, Chainalysis concludes their study with:

“The clear takeaway though is this: Cryptocurrency adoption has skyrocketed in the last twelve months, and the variation in the countries contributing to that show that cryptocurrency is a truly global phenomenon.”

And we couldn’t agree more. It is.

Global Crypto Adoption Index | Source: Chainalysis
Featured Image by NASA on Unsplash – Charts by TradingView