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Crypto cross-border payments, explained

Published

1 Monat ago

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It’s cheaper and faster… and could also help clamp down on money laundering.

There’s a lot of excitement surrounding how crypto could transform cross-border payments as we know it — making remittances, where workers in foreign countries send funds to their loved ones back home, much less expensive.

At present, the World Bank estimates that remittances sent through fiat channels result in average fees of 6.75%. For someone on a modest income, this can take a substantial chunk out of their earnings. Although this is less than the 9.67% charged in 2009, there’s still a long way to go. In the early 2010s, the G8 and the G20 set a target of slashing remittance costs to 5% — and the United Nations’ Sustainable Development Goals also set a target of 3% by 2030.

Cryptocurrencies could help these goals be realized much faster. According to figures from Deloitte, blockchain has the potential to reduce transaction costs by 40% to 80%. But the advantages may not end here. Currently, it can take three to five business days for funds to clear through old-fashioned wire networks — not ideal for someone who needs money in a hurry. But on certain blockchains, it’s possible for payments to be confirmed in seconds.

The advantages may not end here. As Deloitte notes, blockchain transactions can be data rich — meaning that metadata can be transmitted from end to end. All of this can help clamp down on money laundering and terrorist financing, two areas of concern for regulators. Many crypto platforms have introduced Know Your Customer checks to verify users, too.

One crucial benefit that cryptocurrencies can offer is unlocking access to financial services for the unbanked. Research suggests that 80% of consumers in sub-Saharan Africa fall into this category — and worldwide, a total of 1.7 billion people don’t have a bank account. There can be a multitude of reasons for this. Financial institutions may not operate in their geographic area, these services could be too expensive, or consumers may have a lack of trust.





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Bitcoin

‘Bullish year ahead’ — Bitcoin primed for Q1 2021 gains, strength index suggests

Published

8 Minuten ago

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Dezember 29, 2020

By


The monthly relative strength index (RSI) of Bitcoin (BTC) shows the dominant cryptocurrency is primed for another rally.

Is 2021 an ideal time for a Bitcoin rally?

The RSI is a momentum indicator that measures whether an asset is overbought or oversold. When the RSI surpasses 75, it signals the asset is overbought, and when it drops below 30, it means the asset is oversold.

A pseudonymous trader known as “Crypto Capo” noted that the monthly RSI of Bitcoin is set to close above 80. Historically, when this has happened, BTC has saw a strong rally afterward.

Although the monthly RSI of Bitcoin is above 80, which is technically oversold, BTC’s RSI tends to become oversold for prolonged periods during a bull cycle.

The monthly RSI of Bitcoin. Source: Crypto Capo

Hence, traders often refer to an oversold RSI on a high time frame chart, like the monthly candle chart, to forecast an extended rally in the short term to medium term. The trader said:

“Monthly candle is about to close above 80. When this happens, bullish trend continues, with an avg. return of 1010.87%. Each cycle is shorter.”

However, the trader emphasized that one indicator cannot accurately predict the price cycle of Bitcoin. Crypto Capo explained that the combination of a few indicators could serve as guidance for the future. He wrote:

“You cannot base a prediction on an indicator. What we do is combining several methods to have a guideline for the future, to see what is more likely. But in the end, we adapt to what the price does in the present.”

“Bullish year ahead”

Traders have differing perspectives on where Bitcoin is headed in 2021, but most traders remain overwhelmingly bullish.

Cointelegraph Markets analyst Michael van de Poppe said he anticipates Bitcoin to reach $65,000 to $85,000 by next year’s end. He stated:

“I’ve got to revise my view on the potential level of $BTC at the end of 2021. Through this recent surge, I’m expecting it to be between $65,000-85,000 at the end of 2021. Bullish year ahead.”

Meanwhile, the options market is pricing in a 22% chance of Bitcoin achieving $120,000 by next year, which could also serve as a potential guideline on where BTC is heading in 2021.

In the short-term, however, some traders are cautious in entering leveraged positions. A pseudonymous trader known as “TheBoot” said the ideal scenario is to wait for Bitcoin to consolidate at $25,000 or enter after the next price upsurge. The trader explained:

“No rush to enter leveraged trades on $btc right here imo. Best would be to wait and long low 25k or even mid 24k. Alternatively, wait for the next leg up and then a dip from there.”

Cointelegraph previously reported that whales have been buying Bitcoin more aggressively since Christmas, which could buoy the mid-term bull case for BTC entering into 2021.