What To Expect From The Crypto Market In H2 2020

The crypto scene has been abuzz with upbeat signals as 2020 H1 came to a close. What does the H2 hold? Let us delve in here.

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2020 has been an eventful year with lots of events having ripple effects on the financial markets and cryptocurrencies by extension occurring in rapid succession.

From the threat of world war 3 to the pandemic, these events have triggered wild movements in stock and commodities prices and cryptocurrencies have not been left out of these price actions as well.

Read Also: Despite The Marketplace Twists,Thorns and Thistles, Here Is How USDT Has Weathered The Storm

Going into the second half of the year, what can we expect to see? Below are some speculations:

Increased Adoption

Cryptocurrencies have come a long way from being considered a fringe technology. Just in the first half of the year, there was an additional 5 million blockchain wallets created, increasing the global number of cryptocurrency users from about 45 million to just over 50 million.

These wallets are held across various exchanges like Remitano and others. It is predicted that this figure will rise even more sharply as we commence H2. The utility, speed, security and seamlessness of cryptocurrencies and blockchain technology will attract even more people to sign up and get involved in the ecosystem.

Penetration into emerging economies

Emerging economies hold a lot of potential for the expansion of the cryptocurrencies market. Remitano, a crypto exchange created in 2014, seems to have realized this and have tailored its operations to capitalize on the possibilities in these markets.

With operations in countries like Nigeria, Cambodia, Vietnam, Cote d’Ivoire, Thailand, Tanzania and Zimbabwe, among others, it can take advantage of reaching a great number of unbanked or underbanked people.

Crypto markets will offer them the technology-enabled ease of transacting with cryptocurrencies rather than the regular fiat currencies. Remitano is also introducing an NGN wallet, based on the Nigerian fiat currency – the naira. This will make it even easier for citizens to purchase cryptocurrencies, and it is expected that this will be extended to other emerging economies before the end of 2020.

Launch of Facebook’s Libra

Despite all the controversy surrounding it, Facebook still seems on track to launch its cryptocurrency, Libra, by the second half of 2020. There has been a mixed reception to the idea with some people considering it a good idea and lots of other parties opposing it. Whichever side you’re on, Libra’s launch is something to look out for in the second half of the year. It will be interesting to see how it all plays out.

Adoption by more countries

China is said to be close to completing the creation of a national digital currency – an unprecedented step that will make cryptocurrencies even more popular, and perhaps, drive its adoption among other countries. The Chinese digital currency will likely be launched by the second half of 2020, and it is surely another event to look forward to.

Finally, we expect that the usual volatility in the crypto markets will continue into the second half of 2020, as major events like reopening and the American elections will swing market sentiments in different directions.

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Are Hedge Funds Safe in Unstable Times? Here Are A Few Tips You Can Use

Hedge Funds tend to outperform individual stocks as a result of their diversification. There is a bit more you should know as you read on..

Nobody would have accurately predicted that a pandemic would come to change the course of activities all over the world, but smart investors are always prepared for such a time as this. Do you also want to take advantage of this COVID-19 outbreak to invest in hedge funds?

I know you feel unsafe and insecure about investing this period, and it’s perfectly normal to feel that way, mainly because stocks – even of bigger corporations – are generally depreciating, oil prices have reduced, gold is hitting rock bottom, and many more unfortunate economic events are happening.

Notwithstanding, is it safe for you to invest in hedge funds in this unstable period? I am going to share some of the properties of hedge funds with you in the following paragraphs so you can decide if investing in hedge funds is right for you this period.

1. Diversification

Hedge funds offer an array of investments such as long or short, tactical trading, events-driven or emerging markets, and managers take advantage of diversified investments to earn the highest return for the least risk.

Hedge funds focus on specific risks to reduce its risk exposure, by a large percentage, to the general market movements. This technique works because these investments react differently to the same economic event. So, hedge funds generally outperform equities with much lower volatility even in unstable times.

Read Also: What You Need to Know About Samsung Blockchain

2. Long or Short Selling of Hedge Funds

This is a killer strategy that most hedge fund managers use; it involves buying and selling stocks that are undervalued. Managers target shares that are about to hit rock bottom, and they borrow it. Then they make a gross profit by selling out the borrowed shares and buying it back when it falls.

However, there are risks associated with this if the market conditions do not go as planned. It may lead to a situation called a ‘short squeeze.’ Long term selling, on the other hand, involves buying undervalued stocks with the hope that it will appreciate with time, and then sell it when it does.

3. Transparency

Hedge funds are not regulated by the Securities and Exchange Commission, but the Dodd-Frank Wall Street Reform and Consumer Protection Act passed in 2010 requires them to be transparent. The transparency, however, does not include disclosing where investments are made.

4. Loss Reduction

Most hedge funds have highly financially intelligent workers, who do not only employ aggressive investment strategies to maximize returns as well as reduce risks but are also very good in financial management to be factual. They provide investors with the best information there is and also use selective strategies that they believe will add to the bottom-line.

5. Risks and Returns

According to the Securities and Exchange Commissions, hedge funds managers in a bid to maximize returns often engage in many risks. If things do not turn out as planned, it may lead to a bottom-out in returns. Also, the lack of a regulating body makes hedge funds prone to the risk of fraud.

Read Also: How Leverage Trading Works When You Use The Binance Cryptocurrency Exchange

Are Hedge Funds Worth It this Period? Final Words

Hedge funds are low-risk investment vehicles, which are not entirely dependent on the situation of the general economy, mainly because of how it is run. So, it is worth trying; however, losses can be incurred like every other investment vehicle.

Must Read:The Price Volatility of Bitcoin and Cryptocurrencies Explained

Basel Recommends Audit of Bank Risk Weightings In a New Move to Stabilize the Global Financial System

Risk is a measure of probable loss and for banks, it can make all the difference. Basel is taking steps to minimize bank failures and this is how.

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Given the recent financial report regarding the UK’s Metro Bank accounting failure, one of the most renowned financial regulators in the world has given a directive to allow for external auditing checks on the riskiness of banks’ loans.

According to Bill Coen, the Basel Committee on Banking Supervision secretary-general, auditors should be given the mandate of evaluating the bank’s calculations. This step will help eradicate cheating and errors in order to alleviate such a crisis that has been experienced in the 9-year old bank as well as other financial lending institutions.

In reference to Mr. Coen statement to the Financial Times, it’s a critical investment prospect to allow external auditors to assess a bank’s risk weightings.

Mr. Coen further adds that this decision will strengthen the security measures for financial assets making sure that bank lending is given the proper risk weighting it deserves.

The Risk Weighted Assets Loophole

Truth be told, risk-weighted assets (RWA) provide crucial financial information that is very vital in determining the equity capital that a bank should have. And, given the rising cases of banking errors, increased appeals for reforms have been witnessed throughout the world.

Capital levels are vital to banks’ robustness. According to the report, the Metro Bank incident came to light in January where the bank is said to have miscategorized a range of mortgage thereby alarming shareholders and triggering friction with the financial regulators.

Last week, Metro said to have fixed the allotting of the correct risk weighting and errors to those loans. This decision inflated its assets by 11% and prompted a £350m capital increase. Metro says it has experienced a Shares reduction by ½ over the past six weeks.

After the Metro financial incident, the Institute of Chartered Accountants in Wales and England encouraged the idea of auditing the RWAs calculations. However, bankers disregarded the proposal claiming that it was self-interested since the auditing RWAs would result in additional complex fee-based work.


Policymakers are already criticizing the efficiency of the audit profession, especially in the UK. The issue of the trustworthiness of the RWA calculations follows another incidence involving bank lending risk that was usurped by the IFRS9 international accounting rule.

This rule was introduced in 2018, and it directs banks to set apart credit loss provisions prior to the crises of losses instead of waiting until the loss occurs.


The Alarm on Divergent Views

Mr. Coen’s backs up the Basel Committee’s longtime idea for RWA audits due to the increased and unexplained divergences on how different banks view and judge the riskiness concerning different types of loans.


The Metro bank which is among the minor and fastest growing financial institutions in the UK made a mistake of positioning some loans into the standard risk-weighting level.

Usually, large and complex banks employ sophisticated risk models. And, according to financial experts, these models are effective and can apply in the RWA calculations.


Regulators expected to approve these models prior to use but currently, the performance of these models from year to year is not evaluated.

Some bank managements are not into the use of the RWA models which are designed to reduce risk weighting and capital necessities in sections of lending in cases where losses tend to be low. Furthermore, these models do not reflect the probability of a change in the credit cycle.

Conclusion

According to the chairman of one of the largest European lenders, it’s a wise decision to allow the auditing of risk weights. This statement to support audits in banks risk weighting comes after he witnessed a decline in his group’s mortgage risk weighting by ⅓ over the past few years.