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The ‘Amazon of Japan’ is up 10% ahead of Pinterest’s IPO (4755)

caption Rakuten sponsors Barcelona soccer team source Laurence Griffiths/Getty Images Rakuten’s shares jumped 10% on Wednesday as investors looked forward to Pinterest’s public debut, cheered registrations for its new cryptocurrency exchange, and celebrated an analyst upgrade. The “Amazon of Japan” invested in Pinterest in 2012, but its shareholding seems to have fallen below 5%. Rakuten…

The ‘Amazon of Japan’ is up 10% ahead of Pinterest’s IPO (4755)
Rakuten sponsors Barcelona soccer team

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Rakuten sponsors Barcelona soccer team
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Laurence Griffiths/Getty Images
  • Rakuten’s shares jumped 10% on Wednesday as investors looked forward to Pinterest’s public debut, cheered registrations for its new cryptocurrency exchange, and celebrated an analyst upgrade.
  • The “Amazon of Japan” invested in Pinterest in 2012, but its shareholding seems to have fallen below 5%.
  • Rakuten plans to launch a cryptocurrency exchange in June, after buying a local exchange last fall and a Bitcoin-payments processor in 2016.
  • Watch Rakuten trade live.

Rakuten’s shares jumped 10% on Wednesday as investors bet on a strong public debut for Pinterest on Thursday. The e-commerce, online banking, and communications titan – nicknamed the “Amazon of Japan” with a market cap of ¥1.5 trillion ($13.6 billion) – invested in the digital scrapbooking start-up in 2012.

Shares in Japan’s largest e-commerce site likely benefited from Daiwa Securities slapping a “buy” rating on the stock, said Hiroko Sato, an equities analyst at Jefferies. Rakuten’s recent opening of account registrations for its Rakuten Wallet cryptocurrency exchange, scheduled to launch in June, may also have boosted sentiment.

Rakuten invested upwards of $50 million in a $100 million funding round for Pinterest in 2012, according to AllThingsD. Its co-investors – Andreessen Horowitz, Bessemer Venture Partners, and FirstMark – took part in a further $225 million investment round in 2013 without Rakuten.

However, the Japanese group co-led another funding round of $186 million in 2015, according to Pitchdeck data cited by Observer. It invested in Pinterest with the idea of enabling Rakuten customers to purchase items they see on the website. The company appears to have fallen below a 5% shareholding, as it’s not listed with its original investment partners as “principal stockholders” in Pinterest’s IPO filing.

Pinterest plans to price its shares between $15 and $17, valuing the business below its private valuation of $12 billion in 2017. Rakuten investors will be hoping its shares soar, generating a return similar to Rakuten’s $990 million gain on its investment in Lyft, which went public at the end of March.

Rakuten – which owns WhatsApp-rival Viber – acquired a local cryptocurrency exchange called Everybody’s Bitcoin last fall. It snapped up the assets of San-Francisco-based Bitnet, a specialist in processing Bitcoin payments, in August 2016. It plans to begin accepting cryptocurrency payments across its global marketplaces this summer.

The Japanese giant already operates an online bank, issues credit cards, and runs payment apps. It reached 7 million bank accounts and handled 15.4 trillion yen ($140 billion) in global transactions in 2018, according to the company’s fourth-quarter earnings presentation.

Its revenue grew 17% to ¥1.1 trillion ($9.8 billion) as sales rose in both its internet services and financial technology divisions, sending net income up 28% to ¥142 billion ($1.3 billion).

Rakuten may be largely unknown in the US, but its stakes in high-profile start-ups like Pinterest and Lyft, embrace of cryptocurrencies, and continued growth mean it shouldn’t be ignored.

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Traders are piling into bitcoin as a haven against volatile markets. This researcher warns they could get burned.

Dan Kitwood/Getty Images Bitcoin isn’t a ‘unique’ hedge as it’s vulnerable to the same market risks as conventional investments, according to a new study. It becomes more exposed to factors such as inflation expectations when its price is less volatile, the researcher found. The findings are a “cautionary note” for investors, writes author Dimitrios Koutmos,…

Traders are piling into bitcoin as a haven against volatile markets. This researcher warns they could get burned.

hedge mazeDan Kitwood/Getty Images

  • Bitcoin isn’t a ‘unique’ hedge as it’s vulnerable to the same market risks as conventional investments, according to a new study.
  • It becomes more exposed to factors such as inflation expectations when its price is less volatile, the researcher found.
  • The findings are a “cautionary note” for investors, writes author Dimitrios Koutmos, as they suggest bitcoin isn’t “a unique asset class whose price behavior is detached from economic fundamentals.”
  • Watch bitcoin trade live.

An escalating US-China trade war, the slowing Chinese economy, and a prolonged Brexit process have fueled anxiety in financial markets, boosting investors’ interest in bitcoin as a hedge against volatility.

However, new research suggests the cryptocurrency may have limited value as a hedge as it’s vulnerable to the same factors that move the prices of stocks and other mainstream investments. While it escapes some of those drivers when its price is especially volatile, the increased risk may outweigh the greater returns.

“Bitcoin prices, despite their seemingly attractive independent behavior relative to economic variables, may still be exposed to the same types of market risks which afflict the performance of conventional financial assets,” wrote Dimitrios Koutmos, an assistant professor of finance and technology at Worcester Polytechnic Institute in Massachusetts, in a study titled “Market risk and bitcoin returns” published online in the Annals of Operations Research this month. 

Koutmos used treasury bill rates, the VIX and Deutsche Bank FX volatility indexes, treasury yields, forward inflation swap rates, equity indexes, and the difference between corporate bond yields and treasury yields as proxies for short-term interest rates, market-volatility expectations, and other factors that affect traditional financial assets. He examined their influence on daily bitcoin prices between January 2013 and September 2017.

His key finding was that several of these factors were “important determinants of bitcoin returns.” Specifically, short-term interest rates and investors’ expectations of stock-market and foreign-exchange volatility were significant determinants of the price of bitcoin during periods when it rose or fell sharply. Those three factors, along with general economic conditions and inflation expectations, influenced the price of bitcoin when the cryptocurrency was less volatile, according to the study.

The findings serve as a “cautionary note” for investors, Koutmos wrote, as they suggest bitcoin isn’t “a unique asset class whose price behavior is detached from economic fundamentals.”

They also indicate “bitcoin’s usefulness as a diversification instrument is time-dependent,” given the cryptocurrency was more susceptible to factors such as inflation expectations during periods when its price was less volatile. 

If bitcoin truly is a better hedge when its price is moving around, investors who bought into bitcoin’s price surge this month as a hedge against the sharp downturn in stocks might be feeling pretty smug. However, Koutmos also found that bitcoin’s superior returns during periods of high volatility weren’t high enough to offset the increased risk, meaning its returns during low-volatility periods were higher on a risk-adjusted basis. 

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‘Bitcoin Will Disappear,’ Craig Wright Rants in Blistering ‘Satoshi’ Manifesto

‘Bitcoin Will Disappear,’ Craig Wright Rants in Blistering ‘Satoshi’ Manifesto

‘Bitcoin Will Disappear,’ Craig Wright Rants in Blistering ‘Satoshi’ ManifestoSelf-proclaimed “Satoshi Nakamoto” Craig Wright published a blistering manifesto that predicted Bitcoin would disappear in “moments.” | Source: Crypto Strategies/YouTube (i), Shutterstock (ii). Image Edited by CCN.By CCN: Australian entrepreneur Craig Wright published a blistering manifesto that argues bitcoin (BTC) will eventually disappear because it’s being used to facilitate criminal activity. And that perverts his original vision for the cryptocurrency.For reference, Wright has repeatedly claimed that he is Satoshi Nakamoto, the mysterious creator of bitcoin. He has yet to offer definitive proof.Civil War Erupts Between Warring Crypto FactionsWright is a proponent of Bitcoin SV (Satoshi’s Vision), which he insists is the “true bitcoin.”Wright and his ally Calvin Ayre claim BSV will supplant all other fake pretenders to the bitcoin throne and will crush rivals BTC and Bitcoin Cash (BCH) into the ground.Bitcoin Price Will Crash to Zero Says Bitcoin Cash Founder Calvin Ayre https://t.co/34ZrOZVJhu— CCN.com (@CCNMarkets) December 17, 2018‘Bitcoin Needs to Act Within the Rules’In a withering manifesto, Wright claims he created bitcoin to operate within the law and not to facilitate criminal activity like money-laundering.Wright then torched cryptocurrency evangelists who claim BTC is totally decentralized and therefore doesn’t need to play by any rules. However, Wright says they’re deluding themselves and need to be slapped awake.“I designed Bitcoin to be a system that worked within the rules.”“Bitcoin needs to act within the rules. If it does not, then the exchanges and systems that allow people to use Bitcoin act to stop it being widely used and disseminated and criminalise all of those in the system.”“If Bitcoin or any other monetary system seeks to act outside the rules, it becomes an outlaw system, and once it does, it is easy to stop.”“The majority of people want rules. They don’t want to fight in a world of uncertainty, and want to know that the contract that they have conducted will remain valid not just now, but throughout the term of the exchange — for which we need rules.”Craig Wright, the self-proclaimed inventor of bitcoin, says BSV will supplant BTC in due time.Craig Wright: Binance Facilitates CrimeMoreover, Wright insists that cryptocurrency exchanges are basically criminal enterprises that “facilitate money laundering.” Accordingly, he predicts that they will eventually go out of business “because crime will always fail.”Specifically, Wright accused Binance and Bitfinex of lying to their customers when they claim to be decentralized. He says they’re not. Wright also explained that the only reason why anyone wants a decentralized financial platform is so they can use it to hide or launder money.“Groups such as Binance who seek to facilitate money laundering and crime will always fail. They defraud you in telling you that they are decentralised and cannot be controlled.“Bitcoin is a system that was set in stone. If the protocol is changed, then it shows and demonstrates it is not Bitcoin. When those involved altered the rules, they impacted their entire ecosystem — it is a centralised power structure. They defraud you when they lie about decentralisation and tell you that they have no ability to change things but then alter the rules.”“When those in power are able to change the protocol, they can change the lives and the finances of those involved in the system at an arbitrary whim. It is why BTC is not Bitcoin.”Wright: Bitcoin ‘Will Disappear In Moments’Wright further claimed that because bitcoin has been manipulated, it will eventually disappear. And when that happens, he warned that it’ll vanish instantly.“Where a blockchain does not follow the rules…it is simple for government to stop. When the action happens, as it did with e-gold, everything invested in the system will vanish in a flash. When BTC disappears, it will not disappear slowly, it will disappear in moments.”Wright then concluded by promising that he’ll sign a Satoshi transaction after “I have definitively proven I created Bitcoin. Not before.” About The AuthorSamantha ChangSamantha Chang is a financial editor who writes about politics at BizPac Review, about business at CCN, and general news at HVY. She is a law school graduate and an alum of the University of Pennsylvania who enjoys finance, flowers, and fitness. You can find her on Twitter at Samantha_Chang.This article was edited by Josiah Wilmoth.
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