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Nearly $60 million worth of bitcoins moved to Ethereum during June, according to data estimates from Dune Analytics. Wrapped Bitcoin, the oldest tokenized bitcoin protocol on Ethereum, is responsible for roughly 75% of that growth after moving more than 4,800 BTC to Ethereum last month.

Demand has increased for using bitcoin in a variety of decentralized financial services as Ethereum continues to be the most popular off-chain destination for bitcoins. More specifically, yield farming and MakerDAO adding tokenized bitcoin as collateral are likely strong catalysts, said Medio Demarco, former associate at Deutsche Bank and co-founder of cryptocurrency research firm Delphi Digital.

The recent trend shouldnt come as a surprise and will probably continue, Demarco told CoinDesk.

The increasing popularity of tokenized bitcoin is also no surprise to Ben Chan, CTO at BitGo, the cryptocurrency payments processor that spearheaded Wrapped Bitcoin. The purpose of WBTC is to bring bitcoin to the world of decentralized finance, Chan said. Yield opportunities for lending and supplying WBTC in Ethereum-based applications are driving recent growth, he added.

Currently $132 million worth of bitcoin is on Ethereum, at the time of publication, or roughly 0.08% of the leading cryptocurrencys market capitalization, according to OnChainFX.

Is the growing demand to use bitcoin on Ethereum a positive signal for the leading cryptocurrency? According to Demarco, the trend has a synergistic effect for both blockchains.

Chan agreed, telling CoinDesk that, for Ethereum, growth in the value of assets on decentralized finance applications is a step towards the maturation of trustless and transparent financial services. For Bitcoin, the benefit comes from being able to earn yield and collateralize bitcoin, which adds incentive for users to invest in the cryptocurrency, according to Chan.

Using bitcoin on Ethereum is potentially bullish for both networks, Chan said.

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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Nearly $60M in Bitcoin Moved to Ethereum in June - CoinDesk - CoinDesk

Sigal Mandelker, then-U.S. Treasury undersecretary for terrorism and financial intelligence, speaks ... [+] during a 2018 conference on cyber law enforcement at the Department of Justice in Washington, D.C. The U.S. Justice Department charged nine Iranian citizens with hacking hundreds of companies and academic institutions to steal more than $3.4 billion in trade secrets and other data on behalf of the Islamic Revolutionary Guard Corps.

U.S. President Donald Trumps former Treasury under secretary for terrorism and financial intelligence, Sigal Mandelker, has revealed her first project since leaving Trumps Treasury and joining venture firm Ribbit Capital earlier this year. In addition to joining the expanded $49 million Series B in cryptocurrency investigation startup Chainalysis, Mandelker will work on the startups board of advisors.

Mandelkers firm and actor-turned investor Ashton Kutchers Sound Ventures participated in a $13 million extension to the previously announced Series B, as part of a larger push at the startup to deepen its government relationships and focus on using transactions paid for in bitcoin and other cryptocurrencies to track human rights abuses and other illicit activity. Cryptocurrency use for illicit purposes more than doubled to $11.5 billion in 2019, still only accounting for little more than 1% of the total transactions.

While the investment is doubly-notable in that it is both Mandelkers first public work since leaving the Treasury Department, and it is in a company that works with bitcoin, ethereum, XRP and 96 other cryptocurrencies, it is also notable for the continuation of an increasingly clear trend of influential regulators joining the cryptocurrency companies they once oversaw. Former deputy assistant to U.S. President George W. Bush, Juan Zarate, joined another Ribbit portfolio company, Coinbases advisory board in 2014; former chairman of the influential New York Department of Financial Services, Ben Lawsky joined Stone Ridge Asset Management LLC, a $15 billion advisor with ties to multiple bitcoin funds in 2017; and most recently the law firm of the former chairman of the U.S. Commodity Futures Trading Commission, Chris Giancarlo, was hired by Ripple this year.

As part of the investment, which values the company at less than $1 billion, Mandelker, 48, will meet with the Chainalysis team on an as-needed basis to share with them insights gleaned from her own past experience investigating crime that relies on blockchain, and to help them build out new partnerships in both the public and private sectors. The fact that they're building relationships, terrific relationships, both with financial institutions and with the government sector, including with law enforcement, is going to be really important for the future of this industry, says Mandelker.

Born in Chicago, in 1971, Mandelker earned a Bachelors Degree from the University of Michigan and a Juris Doctorate from the University of Pennsylvania Law School, before serving as a law clerk to Supreme Court Justice Clarence Thomas. After six years working at various government agencies, she moved to the private sector as a partner at law firm Proskauer Rose LLP.

Then, in March 2017, Trump appointed Mandelker as Treasury under secretary where she oversaw the U.S. Financial Crimes Enforcement Network (FinCEN), the Office of Foreign Assets Control, (OFAC), the Office of Terrorist Financing and Financial Crimes, and the Treasurys Office of Intelligence and Analysis, which identifies and maps illicit transaction networks.

Mandelker had her first big success using digital currencies to trace illicit activities in 2008, when a Department of Justice team she led helped convict the directors of pre-blockchain digital currency company, E-Gold for their role helping launder funds used to buy child pornography and more. In September 2019, Mandelker made one of her biggest cryptocurrency investigation breaks with the announcement of sanctions against three hacker groups that helped the North Korean government steal and launder billions of dollars in cryptocurrency funds.

Mandelker says she first met Ribbit cofounder Micky Malka earlier this year. Malka sold his first company, a digital wallet called Lemon in 2013 for $46 million, using the funds to become an early investor in bitcoin startups, Coinbase, Robinhood and Xapo. The two hit it off, bonding in part over both having immediate family who survived the holocaust and their desire to fight injustice in the world, she says. She was officially brought onboard in April as a general partner.

In addition to her role helping build relationships as an advisor to Chainalysis, Mandelker will focus on a more full-time basis helping Ribbit identify new investment opportunities, answering regulatory questions for other portfolio companies, and looking for new ways to connect regulators with a wide range of financial technology, thinking through how to help build bridges between the fintech world and the regulator community, whether it's here or abroad, she says.

The New York-based company has now raised a total of about $66 million, from investors including Accel, Benchmark and Digital Currency Group, employs 158 people, and has 295 clients, including the Bank of Montreal and the U.S. Internal Revenue Service, which is managed by Mandelkers former employer, the U.S. Department of Treasury, through a different department.

The company isnt revealing its most recent revenue, though in 2018, it generated $8 million selling services to investigators looking into cryptocurrency transactions and companies looking to ensure they comply with anti-money-laundering and know your customer requirements, enough to land it a place on the Forbes Next Billion-Dollar Startups list. Though the company isnt revealing the terms of the investment, CEO Michael Gronager says they havent quite achieved that milestone yet. We'll work hard to get there pretty soon, he says.

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Trumps Former Sanctions Chief Joins Bitcoin Investigation Firm Advisory Board As Part Of Expanded $49 Million Investment - Forbes

Bitcoin showed its luster during the first half of 2020 by rallying more than 27% percent amid mediocre returns from precious metals including gold, silver and platinum.

Gold underperformed bitcoin by nearly 11 percentage points despite gaining 16 percent in the first half of 2020 and making eight-year highs in late June. Silver and platinum both finished the first half of 2020 with negative gains.

Bitcoins strong performance is no shock to some analysts, especially in context of the benchmark cryptocurrencys increasing correlation with equity markets. Given that equities are now near, or in some cases above, their highs reached in February, its not surprising to see bitcoin do the same, said Ryan Watkins, bitcoin analyst at Messari.

Why compare returns from bitcoin to gold or other precious metals? Gold is bitcoins most aspirational asset, explained Watkins. Like bitcoin, gold is a scarce commodity whose value is derived almost entirely from its monetary premium.

Unlike gold, however, bitcoin investors have historically experienced more extreme volatility. Silver and platinum were also much more volatile than gold through the first half of 2020.

Bitcoin and gold could be seen more like complementary investments than competitives ones based on their performance over the past six months, said David Lifchitz, managing partner at Paris-based quantitative cryptocurrency trading firm ExoAlpha. Given bitcoins historic volatility, holding digital and physical gold together could provide a better risk-return profile than holding either of them individually, said Lifchitz.

Investors typically adjust their portfolios based on the amount of risk required to achieve a certain return. Increased returns often bring with it higher volatility or risk. Depending on how assets correlate, though, a properly weighted portfolio can achieve a higher expected return with a lower level of risk than would be found in a portfolio containing just one asset.

Investing in bitcoin and the less-volatile gold during the first half of 2020 could have reduced an investors risk without sacrificing returns, Lifchitz told CoinDesk. Equal investments in gold and bitcoin, for example, could have more or less matched returns from an investment only in bitcoin while suffering less of a drawdown in March, Lifchitz explained.

But risk-adjusted returns from bitcoin and gold over the last six months may not hold true going forward, said Lifchitz. For one thing, the cryptocurrency market has grown eerily quiet over the past few weeks as bitcoins volatility has plummeted.

A Bloomberg July report on bitcoin noted bitcoins 260-day volatility is at the lowest versus the same gold-risk measure since the crypto assets parabolic 2017 rally. Senior commodity strategist Mike McGlone, who authored the report, said, Volatility should continue declining as bitcoin extends its transition to the crypto equivalent of gold from a highly speculative asset.

Bitcoins dropping volatility to historic lows could quickly change directions, however. McGlone described bitcoin as a resting bull ready for a breakout, adding, We expect recent compression to be resolved via higher prices.

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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Bitcoin Up 27% in First Half of 2020, Beating Gold, Silver and Platinum - CoinDesk - CoinDesk

A recent report from ZUBR Research explains that by 2028, retail demand for bitcoin will exceed the new supply. The report highlights that in eight years as Bitcoins supply rate decreases retail size addresses [will] begin to eat up all the new supply alone. Even the next halving in 2024 could see retail accounting for acquiring 50% of the bitcoins in circulation.

Not too long ago, cryptocurrency proponents witnessed the Bitcoin (BTC) networks third halving, which cut the block reward by 50% on May 11, 2020. Just before the third BTC halving, the active supply issuance or inflation rate was around 3.8%.

Today that number is steadily dropping and at the time of publication, BTCs inflation rate is 3.51%. On June 29, a research report published by ZUBR Research details that in eight years, retail demand will outshine the rate of issuance by a long shot.

The study called Retail Investors Steady in Physical Bitcoin Snatch-Up explains how the BTC network has entered the next reward era. With 90% of all Bitcoins already mined, the remaining supply is estimated to take nearly 120 years to come to market, ZUBR wrote. This figure the remaining 10% taking another 120 years shows just how scarce the cryptocurrency already is.

In time one of the great burdens will be liquidity and physical Bitcoins become harder to come by. The researchers findings also indicate that Covid-19 gave crypto proponents a glimpse at some potential scenarios. ZUBR Research also discussed the question of whether Bitcoin is a better version of gold or not.

The study says that investors will have to weigh this decision as demand has moved in decline for gold further extending that gap available on the market during the Covid-19 crisis. No doubt, Bitcoin saw strong demand in the wake of the coronavirus pandemic. The demand was similarly witnessed for gold, the report highlights.

ZUBR researchers add:

There is a very critical difference to gold, however. Bitcoin supply constraints will not be a result caused by black swan events (such as the global COVID-19 lockdown that shut-in mines), but the permanent perpetual nature of the store-of-value cryptocurrency that is designed to cut off new supply.

The study notes that the researchers leveraged data from the analytics firm Chainalysis. ZUBR predicts that retail demand will continue to grow this year and by 2028 the demand will be far greater than issuance.

Just like with gold markets, the demand for bitcoin while remaining scarce could send the price of BTC sky high. The next halving will sill a lot of retail and investor demand but the fifth halving will see uncontrollable buying pressure.

Extrapolating future demand at this pace points to a very dramatic shift in 2028 when Bitcoins supply rate further decreases and these retail size addresses begin to eat up all the new supply alone, ZUBR estimates. By the time the next reward era comes around in 2024, retail could potentially account for eating up over 50% of the physical supply, the researchers added.

The paper concludes by stressing:

With retail [investors] gunning hard, these supply constraints might come sooner rather than later should growth in demand from smaller investors remain as steady as it has in the past half-decade.

What do you think about the theory that retail demand will outshine bitcoin issuance in eight years? Let us know what you think about this subject in the comments section below.

Image Credits: Shutterstock, Pixabay, Wiki Commons, ZUBR Research

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Demand for Bitcoin Will See a Dramatic Shift in 8 Years - Retail Investors to Eat up Entire New Supply | Economics - Bitcoin News