Interest in cannabidiol-based products has been on the rise, as recent statistics show that the global cannabis market is expected to have reached $42.7 billion in the next four years. Yet as hemp-derived cannabidiol, or CBD, products gain popularity, federal agencies are proceeding with caution around regulatory measures for cannabis products.
In order to address regulatory concerns, policymakers in different regions are looking toward using blockchain technology as a solution that can provide transparency into the complex cannabis supply chain.
Ensure CBD becomes a novel food in Europe
Most recently, the Cannabinoid Association of the Netherlands, which is a consortium of Dutch cannabidiol producers that serve as an advisor to the Dutch government, announced the launch of a blockchain-based traceability tool that would enable consumers to trace certain CBD products directly back to their source.
The CAN launched its blockchain initiative to help provide clarity around the European Union’s looming decision to classify CBD as a “novel food” or not. While European food standards agencies, including the United Kingdom’s, planned to allow CBD products to be sold at certain food retailers in 2021, the European Commission revised its 2015 Novel Food Regulation to say that CBD is not legally classified as a novel food.
So, while it remains unclear how CBD-based food products will be classified in the U.K. and throughout parts of Europe, the CAN’s blockchain tracing tool could demonstrate how a CBD regulatory environment might function and thrive in the United Kingdom.
Mark Reinders, the CEO of HempFlax and a co-founder of CAN, told Cointelegraph that the CBD industry is a lucrative market that attracts a wide array of participants. But in turn, bad actors selling low quality, false or even harmful products are also involved in the cannabis industry. According to Reinders, full traceability along every step of the hemp-derived CBD supply chain is the only way to ensure product quality and consumer protection:
“Blockchain applications can help to increase supply chain transparency by efficiently and cost-effectively tracing materials between parties. The immutable nature of blockchain also helps to avoid fraud and increase trust.”
As the CBD market begins to take shape in Europe, the U.K. and other parts of the world, Reinders noted that new levels of transparency must be adopted by CBD producers worldwide to prove that cannabis products are safe and meet regulations.
Roni Furlan, the founder of the nonprofit organization Novatrace, told Cointelegraph that CAN’s free traceability tool, known as CanCheck, ensures that the CBD supply chain is traced from seed to the final product by uploading production data to a distributed ledger node. He mentioned that supply chain participants can create new material batches; perform production and manufacturing processes; add certificate and lab test documentation; and transfer and receive materials between accounts:
“When a producer submits a request to certify a new batch of product material (bulk product), Novatrace verifies that all traceability data is complete and compiles a traceability certificate. CAN checks the traceability certificate and verifies that the production and lab report data comply to the industry standard. All products (product LOTs) made from the certified material may carry the quality mark logo.”
In addition to ensuring that products comply with regulatory standards, Furlan noted that consumers can access the CanCheck tool for free at cancheck.org. Individuals can scan a QR-code on a product, flyer in a store or paste a link from an online retailer to see which products have the CAN quality mark. Each product containing the CAN quality mark can be traced and verified to show accurate levels of CBD and tetrahydrocannabinol, or THC, the absence of contaminants and a full spectrum composition of the product.
Iris Freie, an advisor to the Dutch government on cannabinoid policy, told Cointelegraph that so far, Jacob Hooy CBD-products have been CAN certified and are fully traceable with three more brands being close to certification, noting that any producer that wishes to market its products within the Netherlands can apply for the quality mark. “We are looking for opportunities to cooperate with other associations in Europe, too, so that our industry standards may develop into European standards,” Freie remarked.
California rallies for cannabis supply chain tracing
California has also been pushing for government authorities to use blockchain technology to help define legal standards around cannabis. This shouldn’t come as a surprise, as California has been ranked as one of the largest legal cannabis markets in the world. However, an NPR article notes that California’s cannabis excise tax generated only $74.2 million during the second quarter of last year, falling short of estimated projections and suggesting that the country’s largest marijuana market may be struggling to take off.
Berkeley city council member Ben Bartlett told Cointelegraph that California government officials are currently advocating to adopt a blockchain-based track-and-trace methodology to ensure accurate record-keeping, better retention of taxation and standardization for the cannabis industry.
Bartlett helped to compose a report illustrating a blockchain roadmap for California. He mentioned that the document has been sent to the California governor and legislator for consideration, noting that there is an entire section dedicated to how blockchain technology can be used to manage the cannabis supply chain. Bartlett said:
“This will help standardize the cannabis industry, as we don’t have a clear picture of seed to sale and all the elements involved. Using blockchain would ensure that we are dealing with a product that is safe and recognized by state health standards. This is also a way to professionalize the emerging cannabis market.”
While the report mentions that California policymakers should accept blockchain-based verification and reporting mechanisms for the cannabis supply chain, the document further notes that policymakers should consider “authorizing participants in the cannabis supply chain to use payment mechanisms that implement stringent industry ‘Know Your Customer’ processes but also accommodate U.S. regulatory concerns.”
According to Bartlett, the blockchain roadmap is the first recommendation of its caliber to be sent to the California governor for review. “Even though cannabis has its own allies and issues in the government, it was important to include because we see it as beneficial for the economy as a whole,” he remarked.
How will governments react?
While steps are being taken by policymakers to use blockchain for a safer, more widely accepted cannabis industry, government officials will have the final say. Bartlett noted that government responses to California’s blockchain roadmap report should be received in the spring or fall of this year. He is hopeful the recommendations will be approved in an attempt to revitalize California’s economy.
Freie thinks every government will recognize the CanCheck tool as useful. However, its success depends on the United Nation’s vote in December on whether CBD will be regarded as a narcotic or novel food. Freie finished by saying: “Ideally, an EU-wide maximum THC concentration will be implemented in the future, too. Then it will be possible to create an industry standard that is applicable across the EU.”
Ethereum: Is the HODLing in yet?
When it comes to the altcoin market, the past few months have shown how important a cryptocurrency Ethereum is. With DeFi growing substantially in 2020, the gains have been felt by ETH in many ways. While ETH has miles to go before it can challenge the market cap and dominance of Bitcoin, its remarkable growth thanks to DeFi and the proposed ETH 2.0 shift cannot be overlooked. With Ethereum’s use cases diversifying, users and investors within the ecosystem are reaping its benefits too.
According to recent network data provided by Glassnode, Ethereum balances on centralized exchanges have fallen substantially over the past few weeks. In fact, the aforementioned data showed a drop from over 18,750K to around 16,750K, resulting in Etherum balances on exchanges falling to their lowest level for the year 2020, at the time of writing.
While this drop may seem alarming to some, it also illustrates a silver lining of sorts for the cryptocurrency. A fewer number of users are now holding their Ethereum on exchanges. Instead, they are moving them to cold storage or cold wallets – a sign commonly associated with increased hodling sentiment. As more users hold on to their Ethereum, the price of the cryptocurrency is also likely to be positively impacted.
One of the reasons why many users are feeling inclined to do so can be due to its recent performance, as well as its ability to derive growth from a booming DeFi ecosystem that is based on its platform.
In fact, it is also interesting to note that over the same timeframe, Ethereum addresses with greater than 10 ETH have also seen a significant rise. According to network data provider Glassnode, such addresses have risen from 275K to 283K in the last three months alone.
One of the key reasons behind the aforementioned drop in Ethereum stored on exchanges ties back to increased hodling sentiment within the Ethereum community, as highlighted above. This, coupled with a rise in Ethereum locked in smart contracts (Since investors are looking to generate greater returns at a time when Etherum’s price is consolidating on the charts), bodes well for the cryptocurrency’s ecosystem.
Brace for it – Bitcoin Futures may be nearing a tipping point
What’s the tipping point for Bitcoin Futures on top derivatives exchanges like the CME, an exchange that has recorded a daily trading volume of over $300M and Open Interest of over $400M, consistently, for the past 3 months.
Well, a small shift in Open Interest or trading volume can have a cascading effect on Bitcoin Futures’ performance in the next 180 days. Such a shift will be influenced by several factors, and it begins at the tipping point. Three factors, to be more specific.
In the current phase of Bitcoin’s market cycle, these factors are more relevant for traders on derivative exchanges. This becomes more evident when the Liquidations chart for BitMEX is observed. Over the past 3 months, sell liquidations have paid for buy liquidations. However, over the last few days, this trend has been reversed, and buy liquidations have covered for sell liquidations on BitMEX.
The point here is to detect the source of the domino effect before the dominoes start falling. In the case of Bitcoin Futures, the tipping point may be closer than anticipated.
One of the top factors influencing the tipping point is the Law of the Few.
The Law of the Few states that “the success of any kind of social epidemic is heavily dependent on the involvement of people with a particular and rare set of social gifts.”
In the case of Bitcoin, institutional investors, derivatives traders, and whales fit the bill. The success of Bitcoin Futures in the global trading community heavily relies on institutional investors trading on CME. In fact, the daily trade volume and Open Interest on CME influence the trading sentiment across spot exchanges as well.
The last time a cascading effect was witnessed was when BTC Futures’ Daily Trading Volume hit $445M on CME and there was a rally all the way up to $614M. At the time of writing, the Daily Trading Volume was up 63.3%, when compared to the figures 6 months ago, and it has the potential to hit $614M with one move in the right direction.
This effect heavily relies on another key factor – The Stickiness Factor.
Back in 2017, when Google search results for “Bitcoin” and “Crypto” broke the record, the trading community witnessed a historic Bitcoin bull run and altcoin rally. Institutional interest and growth of Bitcoin derivative products ensued. A similar event transpired when Bitcoin Futures’ aggregated daily volume hit $184B on 27 July 2020. This event was a unique occurrence, and it made Bitcoin Futures stick in the portfolio of the average institutional investor and the derivatives trader.
The aggregate trade volume hasn’t dropped to pre-July 2020 levels since then. Despite drops in Bitcoin’s price on spot exchanges, Futures contracts continue to trade at a premium and there is more optimism. Volume is not directly impacted by Bitcoin’s price and when the spot market is riddled with bearish sentiment, long contracts continue feeding shorts on BitMEX. This stickiness is a driver of the aforementioned tipping point.
Inching closer to the tipping point, the powerful context is the rise of stablecoins and their instrumental role in lowering the barrier to entry on spot and fiat-crypto exchanges.
Over the past three months, stablecoins like USDT have added $100M in volume every day and their market capitalization and dominance have risen tremendously. In fact, Tether has also crossed a market capitalization of $15B.
This directly influences the tipping point for Bitcoin Futures as it makes Futures trading more accessible to traders. Bitcoin held on exchanges has nearly doubled over the past month, corresponding to an increase in Tether’s market capitalization and circulation. This resonates with derivatives traders who opt for physically-settled Bitcoin Futures contracts on exchanges like Bakkt. In fact, on Bakkt, the daily trade volume was upwards of $80M for the past week, while the Open Interest has been consistently above $10M.
All of these factors are highlighting a shift in derivatives traders’ strategy, while also underlining increased activity on derivatives exchanges. The race to the tipping point has begun – An increase in aggregate trading volume on physically-settled Futures contracts or CME may trigger the much-awaited domino effect.
Tron, Synthetix, VeChain Price Analysis: 19 September
Tron was observed to have hit a strong zone of resistance, before being rejected and pushed to the downside, at the time of writing. In fact, such bearish momentum appeared likely to continue for TRX. At a time when Ethereum was increasingly being criticized for high Gas fees and a congested network, it could have been Tron’s moment to shine, but things didn’t pan out that way at all.
TRX was seeing oversold conditions a few days ago when its RSI hit a low of 23, before ascending just past 50. However, the RSI was unable to remain above 50, and its drop beneath the level highlighted the fact that TRX’s recent 12% surge from $0.263 to $0.296 was merely a bounce.
TRX found a zone of strong resistance at $0.3 and looked likely to drop towards the support at $0.265.
Interestingly, a recent Reddit post has raised questions about JustSwap’s vetting process, claiming that the Tron Foundation has whitelisted a DeFi project that has since pulled a $2 million exit scam. This, despite DappRadar listing the project as “high-risk.”
Synthetix underlined the possibility of dropping lower on the charts. The Directional Movement Index did not yet show a strong trend, but ADX (yellow) was inching towards 20 and could move further north. Also, the rising -DMI (pink) denoted a bearish trend.
Over the past week, every SNX bounce off the level of support has been overwhelmed by selling pressure. This can be expected to continue. With the price registering lower highs, the way down remained the path of least resistance for SNX.
The next level of support after $4.23 lay at $3.36, representing a 20% depreciation.
VeChain showed bullishness in the market after a period of consolidation. The Bollinger Bands expanded to indicate heightened volatility, while the price broke out towards the upper band. At the time of writing, the price was staying above the 20-period moving average, a moving average that could be tested as support as VET steadily climbs toward its resistance around the $0.158 zone.
The breakout was also accompanied by high trading volumes, legitimizing the breakout.
Ethereum: Is the HODLing in yet?
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