"Cryptocurrency is not a safe haven for criminals" | BetaShares

“Cryptocurrency is not a safe haven for criminals”

BY Justin Arzadon | 15 February 2022
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The bitcoin price rallied through the week, reaching a high of US$45.6K before pulling back heading into the weekend, and settling at $42,381 at the time of writing. Since hitting a low of $33.1K two weeks ago, the price has rallied 27.7%, demonstrating the volatility in this asset class.

Ether’s price action lagged bitcoin, down -2.78% in the last seven days vs bitcoin’s +2.12%.

Bitcoin’s market cap is $803.4B, market dominance is sitting at 42.27%, and the value of the entire crypto market is $1.90T.

Price High Low Change from previous week
BTC (in US$) $42,381 $45,661 $41,244 2.12%
ETH (in US$) $2,920 $3,271 $2,870 -2.78%

Source: CoinMarketCap. As at 13 February 2022. Past performance is not indicative of future performance. Performance is shown in U.S. dollars and does not take into account any USD/AUD currency movements.

News we are keeping an eye on 

$3.6B of stolen bitcoin has been seized, making it the largest seizure to date by the U.S. Department of Justice.  A total of 119,754 bitcoin was stolen in the exchange hack of Bitfinex back in 2016. Ilya Lichtenstein, 34, and his wife, Heather Morgan, 31, have been arrested for ‘alleged conspiracy to launder $4.5 billion in stolen cryptocurrency’. Over 2000 transactions were made to a crypto wallet after the hack, and over the last five years another 25,000 transactions out of the crypto wallet. FBI Deputy Director, Paul M. Abbate, said: “Today’s case is a reminder that the FBI has the tools to follow the digital trail, wherever it may lead.” Deputy Attorney General, Lisa O. Monaco, commented: “Today’s arrests, and the department’s largest financial seizure ever, show that cryptocurrency is not a safe haven for criminals”.1

Earlier in the year it was reported that the Central Bank of Russia wanted to impose a blanket ban on bitcoin and other cryptocurrencies, and did not want Russia’s citizens to participate. However, according to local newspapers, the Russian government and Central Bank have reached an agreement on cryptocurrencies. Both organisations will treat bitcoin and crypto assets as currencies, and crypto service providers will be obliged to meet certain capital and liquidity requirements, along with informing Russians about relevant risks.2 The Kremlin estimates that approximately 12 million citizens may own cryptocurrencies worth up to 16.6T Rubles (US$214 billion), on which authorities expect to collect more than $13 billion in tax payments.3

The world’s biggest cryptocurrency exchange by trading volume, Binance made a $200 million investment in Forbes, the media company which is set to go public via a special purpose acquisition company (SPAC). Forbes CEO, Mike Federle, said: “Forbes is committed to demystifying the complexities and providing helpful information about blockchain technologies and all emerging digital assets,” whilst Changpeng ‘CZ’ Zhao, founder and CEO of Binance, said: “As Web 3 and blockchain technologies move forward and the crypto market comes of age we know that media is an essential element to build widespread consumer understanding and education. We look forward to bolstering Forbes’ Digital initiatives, as they evolve into a next level investment insights platform.” The deal is expected to close in Q1 of 2022.4

On-chain metrics

Hashrate” refers to the total combined computational power that is being used to mine and process transactions on a Proof-of-Work (PoW) blockchain, such as Bitcoin. The metric is important as it assesses the strength and more specifically the security of the Bitcoin network. The more miners, the higher the hashrate, and the more secure the blockchain becomes.

Looking at data from on-chain analytics company Glassnode, Bitcoin: Mean Hash Rate (7d Moving Average) has steadily continued to increase, with only a few minor dips along the way, since the Bitcoin price bottomed last July, and recently set a new all-time high, even though prices have fallen dramatically since November.

Bitcoin mean: hash rate
Source: Glassnode.

Bitcoin: Percent Supply in Profit (7-day Moving average) i.e. the percentage of existing coins whose price at the time they last moved was lower than the current price, allows us to better understand the current state of the Bitcoin market. Using a simple threshold at 95% can help to identify market tops and when supply in profit falls below 50%, can help identify market bottoms.

Looking at the chart below, 74.5% of supply is still in profit. Although not close to 50% which historically represented longer-term bottoms in 2019 and 2020, the current percentage is only slightly higher than the 67% seen in the lows of 2021.

Bitcoin: percent supply in profit

Source: Glassnode.

Altcoin news

The XRP price was up as much as 30% for the week, before falling slightly on the news that the SEC vs. Ripple case might be heading towards a verdict. XRP has been delisted from a number of U.S. exchanges due to a case where the U.S. Securities and Exchange Commission (SEC) claims that Ripple sold XRP as illegal securities. According to court documents, Judge Analisa Torres has granted Ripple permission to respond to the SEC’s Memorandum of Law in support of the Motion to Strike fair notice defence.

According to the Ripple website: “XRP is a digital asset built for payments. It is the native digital asset on the XRP Ledger—an open-source, permissionless and decentralised blockchain technology that can settle transactions in 3-5 seconds. XRP can be sent directly without needing a central intermediary, making it a convenient instrument in bridging two different currencies quickly and efficiently.”

Investing in crypto assets or companies servicing crypto-asset markets should be considered very high risk. Exposure to crypto assets involves substantially higher risk when compared to traditional investments due to their speculative nature and the very high volatility of crypto-asset markets.

Investing in crypto assets or crypto-focused companies is not suitable for all investors and should only be considered by investors who (i) fully understand their features and risks or after consulting a professional financial adviser, and (ii) who have a very high tolerance for risk and the capacity to absorb a rapid loss of some or all of their investment.

Any investment in crypto assets or crypto- focused companies should only be considered as a very small component of an investor’s overall portfolio.


1.https://www.wired.com/story/bitcoin-seizure-record-doj-crypto-tracing-monero/#:~:text=6%3A16%20PM-,The%20DOJ’s%20%243.6B%20Bitcoin%20Seizure%20Shows%20How%20Hard%20It,measures%20to%20cover%20their%20tracks.&text=On%20Tuesday%2C%20Ilya%20Lichtenstein%20and,billion%20worth%20of%20stolen%20cryptocurrency.

2. https://news.bitcoin.com/russian-government-approves-plan-to-regulate-cryptocurrency/
3. https://cointelegraph.com/news/simple-math-says-russia-could-collect-up-to-13b-in-crypto-tax-each-year
4. https://www.forbes.com/sites/forbespr/2022/02/10/forbes-announces-200-million-strategic-investment-from-binance/?sh=74847bb657e2
5. https://www.fxstreet.com/cryptocurrencies/news/judge-torres-unseals-confidential-documents-in-sec-vs-ripple-case-xrp-continues-uptrend-202202050725
6. https://ripple.com/xrp/


Off the Chain will be published every Tuesday, and provide the latest news on bitcoin and the rest of the crypto market along with analysis and insights into the world of crypto.

It provides general information only and is not a recommendation to invest in any crypto asset, crypto-focused company or investment product.

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