Category: Bitcoin

The first-ever Bitcoin-backed synthetic United States dollar, USDh, is set to launch with an attractive 25% yield, marking a significant development for Bitcoin-native decentralised finance.

Hermetica, a Stacks-native DeFi protocol on Bitcoin, announced the launch of USDh, allowing users to earn up to 25% yields. According to Jakob Schillinger, the founder and CEO of Hermetica Labs, USDh will provide Bitcoiners with a reliable way to hold and earn a yield on their U.S. dollars, eliminating the need to rely on traditional banking systems or invest in non-Bitcoin-related products.

The new synthetic dollar, scheduled for release in June, is poised to bring increased liquidity and new use cases to Bitcoin DeFi. It will enable Bitcoiners to trade, lend, and transact using a dollar asset fully backed by Bitcoin.

The launch of USDh follows the recent release of Ethena’s USDe, which offered holders a 27.6% yield. However, concerns about the sustainability of such high yields have been raised. Hermetica’s 25% annual percentage yield (APY) is notably higher than the 20% yield offered by Anchor Protocol on TerraUSD (UST) before Terra’s collapse in May 2022.

Despite concerns, Schillinger assures that the yield is sustainable and derived from future funding rates. He explained that the Bitcoin-native yield fluctuates with the market’s demand for long leverage. According to backtest data from January 2021 to March 2024, the average APY was 11.71%, reaching 26.11% during the 2022 bull market.

Schillinger is confident that the demand for Bitcoin futures will keep USDh yield sustainable, stating that the structural demand for long leverage in the futures markets supports this.

As more protocols develop utility and DeFi capabilities around Bitcoin, Schillinger believes that Bitcoin DeFi will surpass Ethereum DeFi in the next five years. He pointed out that Ordinals trading volumes have already exceeded Ethereum and Solana NFT volumes combined in certain months, indicating the potential for explosive growth in Bitcoin DeFi, backed by over $1 trillion in latent BTC capital.

Bitcoin mining is essential for validating transactions and generating new Bitcoins. With around 19.5 million Bitcoins already in circulation and a capped total supply of 21 million, mining is a race to unlock the remaining 1.5 million Bitcoins.

Finding a new Bitcoin requires powerful computers to solve complex mathematical puzzles, which takes time. The average time to mine 1 Bitcoin, considering the current mining difficulty and the 10-minute block time is roughly 10 minutes to mine not just one but 3 Bitcoins. However, given the immense computing power needed, it’s highly improbable for one miner to win the entire block reward.

Mining hardware plays a significant role in determining how long it takes to mine a Bitcoin. Those with higher hash rates have a better chance of earning Bitcoins, often joining mining pools to combine their computing power and improve their chances.

Solo mining Bitcoin is incredibly challenging due to intense global competition. Block rewards are almost impossible for a single miner to obtain due to Bitcoin’s proof-of-work consensus protocol.

With the increasing complexity of mining and the high energy costs involved, earning 1 Bitcoin per day without investment is nearly impossible. Even those willing to invest substantial sums may find competing with large-scale mining operations difficult.

While it’s enticing to imagine earning a full Bitcoin daily, it’s essential to approach the cryptocurrency market cautiously, avoiding scams promising quick and easy returns. Understanding crypto trading, blockchain technology, and market trends is crucial for those interested in investing in cryptocurrency mining.

According to market analysis, bitcoin traders are eyeing two key indicators, the funding and three-month annualised basis rates, indicating a potential upward price movement.

A crypto expert, Will Clemente, noted in a recent post on X, “Looks like we’re consolidating before the next leg up,” highlighting that both indicators have “cooled off” after briefly dipping into negative territory.

The funding rate, a significant indicator of overall trader sentiment, recently recovered from negative territory. This recovery suggests an increasing confidence among traders in Bitcoin’s price. Exchanges use the funding rate to balance traders entering long positions with those opting for short positions, mitigating the risk of overexposure.

According to open-source data, the open interest-weighted funding rate is 0.0091%, indicating a positive shift from a negative rate of -0.0050% on May 4.

“The Bitcoin funding rates remaining this low, while Bitcoin is bouncing makes me feel extremely bullish,” echoed pseudonymous crypto trader Mister Crypto to their 98,000 X followers.

However, liquidation data contradicts this bullish sentiment, suggesting that futures traders are still leaning bearish and anticipate a near-term price drop.

A 3.5% rise in price to the key $65,000 level could liquidate $1.36 billion in short positions, whereas a 3.5% drop to $60,500 would only wipe out $650 million in long positions.

In addition to the funding rate, traders are also monitoring the three-month annualised basis rate, which measures the cost difference between Bitcoin futures contracts and the actual price of Bitcoin.

Major exchanges have seen an increase in the annualised basis rate, reaching the higher end of the 5–10% neutral range. Traders often view rates above 10% as a neutral-to-bullish signal.

With both indicators showing signs of a potential bullish trend, traders are cautiously optimistic about Bitcoin’s price movement in the near term.