SINGAPORE, Jan. 25, 2024 /PRNewswire/ — OKX Ventures, the investment arm of leading crypto exchange and Web3 technology company OKX, today announced its seed round investment in B² Network, the first EVM-compatible rollup based on zero-knowledge (ZK) proof verification commitment on Bitcoin and the first data availability (DA) layer for Bitcoin rollups.
B² Network is a Bitcoin Layer 2 network that utilizes ZK rollup and an on-chain logical gate commitment verification mechanism. Its goal is to address the scalability challenges of Bitcoin while maintaining its core principles of decentralization, trustless operations and a transparent ledger. The network is EVM-compatible, developer-friendly, and supports users with both Bitcoin and Ethereum account addresses, intending to broaden the utility and influence of Bitcoin and its emerging derivative assets in the Web3 space. Additionally, it provides a DA layer for other Bitcoin rollups, accelerating the expansion of the BTC ecosystem.
OKX Ventures Founder Dora Yue said: “We are honored to invest in B² Network. The Bitcoin ecosystem has seen tremendous growth over the past year. However, its diversity of applications has been restricted by its Turing incompleteness, transaction costs and network congestion. On the other hand, B² Network being EVM-compatible, addresses Bitcoin‘s scalability issue while diversifying the Bitcoin ecosystem. It allows interoperability between Ethereum and Bitcoin for on-chain application development. This addresses the challenges and needs of the Bitcoin network, fostering the future development of its ecosystem.”
To learn more about B² Network, click here.
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About OKX Ventures
OKX Ventures is the investment arm of global leading crypto exchange and Web3 technology company OKX, with an initial capital commitment of USD100 million. It focuses on exploring the best blockchain projects on a global scale, supporting cutting-edge blockchain technology innovation, promoting the healthy development of the global blockchain industry, and investing in long-term structural value.
Through its commitment to supporting entrepreneurs who contribute to the development of the blockchain industry, OKX Ventures helps build innovative companies and brings global resources and historical experience to blockchain projects.
Find out more about OKX Ventures here.
SOURCE OKX Ventures
Among the financial titans cleared to sell “exchange traded funds” that invest directly in bitcoin are Boston’s Fidelity Investments, along with other heavies such as BlackRock and VanEck. On Fidelity’s investment platform, one of the largest in the world, you can now buy these ETFs right alongside regular stocks and bonds.
Franklin Templeton, another investment giant, on Thursday posted a picture of its Ben Franklin avatar featuring the ‘laser eyes’ meme, usually used by crypto superfans on social media to embellish their profile pictures with a tongue-in-cheek, futuristic vibe.
“It’s a very big deal but possibly not for some of the reasons people have been excited on X, and all the memes and jokes of the last few hours,” said Christian Catalini, founder of the MIT Cryptoeconomics Lab. “It’s a very important step toward bitcoin establishing itself as an important, new asset class that traditional finance institutions can directly engage with.”
(Catalini is also cofounder of the bitcoin payments company Lightspark.)
If you have not been paying attention to crypto following the market crushing implosion of the FTX exchange fourteen months ago, this might surprise you: Despite mounting regulatory and economic setbacks, crypto was a top market performer in 2023.
Bitcoin, the largest and most valuable cryptocurrency, surged 154 percent last year. Meanwhile, the Standard & Poor’s 500 index gained 24 percent, and Nasdaq rose some 44 percent.
All this was happening as one-time FTX chief executive Sam Bankman-Fried went on trial — and was convicted — for the fraud associated with his firm’s collapse.
“It’s been a wild ride to see the belief system of this industry come to fruition,” said Dave Balter, chief executive at FlipSide Crypto, a Cambridge firm that specializes in crypto data analysis. “The ‘big deal’ on a personal level’s a spiritual one, where disbelievers and contrarians now recognize why our conviction has never wavered.”
But even as some big names have come along to the crypto world, there are some high-profile holdouts — and they’re airing some of the same critiques that have faced crypto for years. Namely, bitcoin and other cryptocurrencies have always been among the riskiest, most volatile investments — prone to wild swings in value that are difficult to predict.
Vanguard, the bastion of plain-vanilla index funds, said it was not planning to offer bitcoin ETFs through its brokerage even as its competitors rushed to do so.
“Our perspective is that these products do not align with our offer focused on asset classes such as equities, bonds, and cash, which Vanguard views as the building blocks of a well-balanced, long-term investment portfolio,” the company said in a statement to The Wall Street Journal.
And lest anyone think crypto had lost its ability to unpleasantly surprise investors, the market took another big hit just days after the ETF approval many boosters had been eagerly awaiting. By Sunday, bitcoin had seen its price drop by upward of 10 percent from its midweek high as investors sought to take profits following the recent runup.
It was just the first week of growing pains in the relationship between bitcoin and the big-time traditional investment firms.
“It’s like communing with the enemy,” said Ryan Shea, a London-based crypto economist at the financial technology firm Trakx. “But for moms and pops to get comfortable in this world, to gain legitimacy, it’s important to get to the next level.”
Traditionally, buying bitcoin or other cryptocurrencies has looked a lot different than trading more familiar investments. Investors often must create accounts with crypto exchanges such as Coinbase (though a handful of stock brokerages offer some crypto services). And for those who want maximum control of their assets’ security, there are a handful of independent “crypto wallets” to use for storage.
Compare that process to the relative ease of investing in one of these new bitcoin ETFs, which you can buy and sell in the same way you’d trade shares in Microsoft or Nvidia. While ETFs for stock and other investments have long been available to brokerage customers, this is the first time one of these funds can actually hold bitcoin.
Already, the 11 funds approved by the SEC are battling it out over the new money in the market, and that could mean lower costs for consumers in the short term. They are competing on fees, which tend to be below 0.5 percent of assets, and some, such as ARK Investment Management, have temporarily waived fees altogether.
Bitcoin-linked products that were on the market before, including derivatives-based funds and trusts, charge as much as 2 to 3 percent.
“It’s a land grab,” said Paul Karger, cohead of Boston’s Twin Focus, a wealth adviser. “A handful of big winners will own most of the Main Street in-flows.”
Given the lower fees, these new funds may hew to the price action of bitcoin more closely. That is something their predecessors, which were largely based on futures contracts and have been around for two years and change, have not done. This discrepancy, called ‘tracking error’ in trade lingo, occurs when an ETF’s value diverges from its underlying assets.
Matthew Walsh, of Boston blockchain investor Castle Island Ventures, said that bitcoin futures ETFs have a “tracking error,” that can reach 5 to 10 percent, while he predicts the spot ETFs will have a one-to-one correlation to the underlying price of bitcoin. “It’s a huge win for the retail investor,” Walsh said.
Eric Biegeleisen, partner and deputy investment chief at ETF investor 3Edge, said with this move, bitcoin is a step closer to becoming a “legitimate” asset. While he likes having 11 funds to choose from, now comes the work to figure out which one he likes best. “Certainly, there are concerns right out of the gate,” he added. Chief among them are fraud and asset security.
It is going to take a huge amount of education to get investors comfortable, said Ophelia Snyder, cofounder and president of 21Shares, a financial firm that worked with ARK to create one of the new bitcoin ETFs. But the early signals show there’s a lot of potential.
“Crypto’s never seen money like this. A billion dollars is a lot of money in one day, but we saw that within the first two hours. This isn’t the same ballgame anymore.”
Suchita Nayar can be reached at email@example.com.
Euronews Business takes a closer look at what investments are most likely to yield in the new year, amidst various uncertainties in the global economy.
2023 was a roller coaster of a year for the markets, fuelled by rate-cut expectations from the US, the UK and Europe, global tensions erupting in the Middle East and, not least of all, disappointing news from China’s economy.
The best bets of 2023 seemed to be made around the tech sector**, led by giants such as Nvidia** and Alphabet benefiting from their AI prospects, while cryptocurrencies and stocks of weight-loss drugs have also had huge gains in 2023.
But what is the best bet for 2024?
European equities and crypto are expected to rise while commodities could be among the most disappointing investments in 2024, according to BCA Research’s outlook. It believes AI may also lose some of its steam.
A mixed global outlook may drive investors’ hands
A key driver of investment decisions this year is when leading central banks the US, the UK and the Eurozone are expected to cut rates.
“Growth stocks in particular are likely to keep benefiting from this renewed enthusiasm given that they have suffered in a higher interest rate environment,” Head of Money and Markets at Hargreaves Lansdown Susannah Streeter told Euronews Business.
“Hopes for a softer landing for the US economy could also help companies selling discretionary products in the US market. However, given that the full impact of interest rate hikes is yet to be felt, there is still a chance that it’ll be a bumpy way down from peak rates.”
Others forecast a lot murkier outlook for the global economy, the growth of which has been around 3% in the last two decades. However, output is expected to fall lower for the longer term, as the main contributor to the global economy, China, is battling a serious property crisis within its own economy.
Dhaval Joshi Chief Strategist at BCA Research told Euronews Business that no sector could replace entirely the missing output of the $100 trillion Chinese real estate market, which is worth a staggering six times the $18 trillion Chinese economy.
“The end of China’s housing boom means the end of the world’s main growth engine,” said Joshi. “So it’s at least 25% and that’s been the main engine of Chinese growth, but that’s also been the main engine of world growth.”
The chief strategist expects that demand for commodities will be hit hard by the slowing growth of China. “It’s going to be a much, much tougher environment for commodities, at least for the next year, because the big source of demand is just not there anymore and new demand is simply not enough to fill the gap from China.”
Global efforts of decarbonisation, which requires lots of metal, could partially make up for the loss.
Meanwhile, oil prices are expected to climb in the short term. “Hopes of a soft landing for the US economy has seen [oil prices] edge back up and if OPEC+ nations extend production cuts, it’s likely to gain more ground,” said HL’s Susannah Streeter.
BCA agrees with the short-term spike, though it puts it down more to the geopolitical tensions in the Middle East. It sees no persistent threat of higher prices in the longer term. “The already weak demand will collapse if the price is too high,” explained Joshi.
What is 2024 holding for the US economy?
BCA Research expects a sharp slowdown in US growth. This is partly because real interest rates have only come into positive territory over the past six months. That rise is going to hit businesses which had previously benefited from negative real interest rates when inflation was higher than the Fed’s benchmark rates.
BCA expects that the central bank will have to cool down the economy, to cool down the prices.
“If you really want to kill inflation and keep expectations anchored at 2%, then the low point is not 2, it has to be more like 1.5% or so. And it’s very difficult to get there without a recession,” said Joshi.
It may hit businesses hard, as well as consumption – the latter propping up two-thirds of the US economy. Household spending has painted a rosy picture so far but, Joshi said, a massive inflow of illegal immigrants in 2023 gave a false reading of the overall numbers.
“While real consumption increased by 2.4%, the population increased by about 1.2% or so. If you look at consumption per head, it’s not that good.”
If the US economy is showing signs of slowing, the stock market could also be facing a setback, with certain companies’ profits downgraded.
Bonds and European equities could be the winner of 2024
On the other hand, the economic downturn may favour bond investments across the US, UK and Eurozone. “It’s very positive for the bond market in 2024,” said the chief strategist.
In its 2024 report, BCA suggests that European equities could be the winner of the next 6-12 months.
Joshi puts his bets on healthcare companies’ performance, among other consumer staples stocks, which had underperformed in 2023. Switzerland’s MSCI index, which didn’t do well in 2023, is also expected to outperform in 2024.
Hargreaves Lansdown’s Susannah Streeter said: “Highly cash-generative businesses are a good basis for a diversified equity portfolio. Companies which have taken on a lot of borrowing to grow are always riskier than those who are flush with cash. With recession risks clouding the prospects for some European countries, this strategy is one to keep in mind.
Turning from gold to ‘digital gold’
Cryptocurrencies are going through a transformation.
For a long time, they were considered a high-risk investment but investors recently took them as a hedge against risks for events such as a banking crisis, a role that has long been identified with real gold.
“What we’re finding is that a lot of investors are very slowly diversifying from sort of physical gold to, what I call, digital gold,” said Joshi. “It’s also a generational thing. Anyone above the age of 50, doesn’t like digital gold, anyone in their 20s or 30s, says: ‘I am very, very comfortable with digital gold. I don’t want physical gold.'” Joshi explained.
How the AI mania may deflate
“The AI gold rush will struggle to find any gold,” writes the BCA report.
Tech stocks banking on the future success of AI had been soaring in 2023. However, the report notes that real productivity that contributes to economic growth is yet to be demonstrated. The one company that could really benefit from the AI mania is Nvidia “selling the picks and shovels” to those companies in a gold rush for AI, said Joshi. “But the tech companies that are buying the picks and shovels are struggling to find any gold.”
BCA’s overall recommendation is to keep more investments in long-duration bonds, Swiss equities and French luxury goods’ stocks but favour less cash (except for dollar, which is recommended) and energy or industrial metal-related investments.
Disclaimer: This information does not constitute financial advice, always do your own research on top to ensure it’s right for your specific circumstances. Also remember, we are a journalistic website and aim to provide the best guides, tips and advice from experts. If you rely on the information on this page, then you do so entirely at your own risk.