Thursday, 11 August 2022

Market Summary

Market Summary 11 August 2022

Bitcoin Price: US$ 23,954.05 (+3.47%)
Ethereum Price: US$ 1,853.57 (+8.86%) 

 

Decentralized Stablecoins Take Off, Investing in Web3 with Tangent

  • US CPI increased by 8.5% in July versus last year, lower than the expected rise of 8.7% as well as lower than previous month’s rise of 9.1%.
  • Curve Finance reported and fixed a name server exploit which resulted in the loss of $612k worth of assets.
  • Coinbase reported Q2 earnings with revenue at $808 million and net loss at $1.1 billion. Revenue declined 64% versus last year as cryptocurrency prices fell.
  • Hotbit Exchange suspended trading, deposits and withdrawals as senior managers were subpoenaed for allegedly violating criminal laws.
  • Prices of governance tokens issued by decentralized stablecoin projects have spiked up with tokens like FLX, LQTY and SPELL rising between 21-40% since last week.
  • This market reaction was in response to Circle blocking over 75k USDC tokens by blacklisting the 44 Tornado Cash addresses that have been sanctioned by the US Treasury Department.
  • When an address is blacklisted by Circle, it can no longer receive USDC, while any USDC controlled by the address cannot be transferred on-chain. Holders of centralized stablecoins like USDC are prone to such censorship risk.
  • However, MKR and FXS did not reflect the change in market sentiment and stayed relatively flat. This may be because a large portion of the collateral backing DAI and FRAX stablecoins consists of USDC tokens.
  • On the other hand, the collateral backing RAI and LUSD stablecoins is entirely ETH, while that for MIM is yield-generating tokens like deposit receipts from Yearn or Convex.
  • Tangent: Investing in Web3 Founders as an Angel Collective w/ Jason Choi – youtube

 

Wealth managers and VCs are helping drive institutional crypto adoption — Wave Financial execs

  • Two executives at Wave Financial, an asset management firm providing bespoke strategies to high-net-worth individuals and entities, have reported seeing increased institutional demand for crypto products amid the bear market.
  • Speaking to Cointelegraph at the Blockchain Futurist Conference in Toronto on Wednesday, Wave Financial’s head of business development Mike Jones said institutional investment in crypto could be driven by the high end of wealth management firms including Morgan Stanley, Merrill Lynch and Goldman Sachs looking for ways to allow their clients to get exposure to the space. Jones cited the example of BlackRock partnering with Coinbase on Aug. 4, a move that will give users of the asset manager’s institutional investment management platform Aladdin access to crypto trading, custody, prime brokerage and reporting capabilities.
  • In addition to wealth managers, the Wave exec said venture capital may see “a lot of growth” in part due to demand for innovative investment vehicles. Wave Financial’s investment and venture principal Gerard Berile added that VCs giving clients exposure to crypto without going through centralized exchanges and still dealing in large scale volume has been a “net positive for the industry as a whole.”

 

$475M in Bitcoin options expire this week — Are bulls or bears poised to win?

  • Bitcoin (BTC) has been posting higher lows for the past eight weeks, but during this time, BTC has not been able to flip the $24,000 resistance to support on at least three different opportunities. This is precisely why the $475 million Bitcoin options expiry on Aug. 12 might be a game changer for bulls.
  • Considering the current regulatory pressures in play, there seems to be a good enough rationale for avoiding bullish bets, especially after the U.S. Securities and Exchange Commission pressed charges against a former Coinbase manager for illegal securities trading on July 21.
  • For this reason, most traders are holding back their bets above $24,000, but events outside of the crypto market might have also negatively impacted investors’ expectations. For example, according to regulatory filings released on Aug. 9, Elon Musk sold $6.9 billion worth of Tesla stock.
  • Bitcoin’s failure to break below $21,000 on July 27 surprised bears because only 8% of the put (sell) options for Aug. 12 have been placed above $23,000. Thus, Bitcoin bulls are better positioned for the $475 million weekly options expiry.

 

Optimism TVL surges nearly 300% M/M ahead of The Merge upgrade

  • According to data from DefiLlama, total value locked (TVL) on Optimism, a layer-2 scaling solution for the Ethereum blockchain, has surged 284% in the past month. The vast majority of TVL consists of users lending and borrowing assets on Aave through Optimism’s layer-2 chain.
  • Investors have been bidding up digital assets related to the Ethereum ecosystem in anticipation of The Merge upgrade, which will see the blockchain transition from a proof-of-work network to that based on proof-of-stake. 
  • According to a recent Ethereum developer call, the tentative date for The Merge coming online has been scheduled for Sept. 19. As a layer-2 Ethereum blockchain, Optimism seeks to scale the ecosystem via Rollups, or off-chain computations, to speed up transactions. Transactions are recorded on Optimism and finalized on Ethereum.
  • The project is home to 35 protocols, including derivatives exchange Synthetix, decentralized exchange Uniswap, and automated market maker Velodrome. Due to the high volume of user trade orders on exchanges (including cancellations), the Ethereum blockchain’s current capacity of 30 transactions per second is ill-equipped to handle such demand. However, some experts predict that the network could potentially scale to 100,000 transactions per second after The Merge upgrade, with layer-2 solutions further enhancing such capacity. 

 

Bitcoin price sees $24K, Ethereum hits 2-month high as US inflation shrinks

  • Lower than expected inflation data sparks an instant rally in crypto, while the U.S. dollar pays the price.
  • Data from Cointelegraph Markets Pro and TradingView confirmed hourly gains of around $1,000 after U.S. Consumer Price Index (CPI) data for July showed a slowdown versus the previous month.
  • While managing $24,179 on Bitstamp, BTC/USD nonetheless did not attract enough momentum to challenge levels from the day prior.
  • Nonetheless, relief among traders was palpable, as declining inflation should signal to the Federal Reserve that less aggressive interest rate hikes are necessary going forward. This,  in turn, should reduce pressure on risk assets, including crypto.
  • Year-on-year CPI inflation came in at 8.5%, 0.2% below expectations, while month-on-month, the figure was unchanged from June.

 

Voyager Digital reportedly had deep ties with SBF-owned Alameda Research

  • Voyager Digital, the crypto lending firm that went bust due to the crypto contagion initiated by Three Arrow Capital’s (3AC) insolvency is currently fighting its bankruptcy court battle. The court proceedings and financial documents have shown a deep relation between the crypto lending firm and the Sam Bankman Fried-owned Alameda Research.
  • Alameda is a quantitative trading firm that was also one of many borrowers from Voyager and reportedly owed $370 million. However, within weeks of 3AC’s downfall, Alameda moved from a borrower to a lender and offered a $500 million bailout in late June.
  • SBF took to Twitter to give insights on the bailout deal that eventually became the point of conflict for Voyager. The troubled lender’s legal team claimed that the CEO was trying to create leverage for the trade.
  • Legal documents and financial papers point toward the ties between the two companies as early as September 2021. The same documents also indicate that Alameda borrowed much more initially than the current amount of $370M. Voyager’s financial books indicate that it lent out $1.6 billion in crypto loans to an entity based in the British Virgin Islands, the same place where Alameda is registered.

 

Iran makes $10M import with crypto, plans ‘widespread’ use by end of Sept

  • Struggling through decades of economic sanctions, Iran has placed its first international import order using $10 million worth of cryptocurrency, according to a senior government trade official. 
  • News that the Islamic republic placed its first import order using crypto was shared by Iran’s Deputy Minister of Industry, Mine & Trade Alireza Peyman-Pak in a Twitter post on Tuesday.
  • While the official did not disclose any details about the cryptocurrency used or the imported goods involved, Peyman-Pak said that the $10 million order represents the first of many international trades to be settled with crypto, with plans to ramp this up over the next month, noting:
  • “By the end of September, the use of cryptocurrencies and smart contracts will be widely used in foreign trade with target countries.”

 

Tether also confirms its throwing weight behind the post-Merge Ethereum

  • Hot on the heels of an official announcement from USD Coin (USDC) issuer Circle Pay, stablecoin giant Tether has now also officially confirmed its support behind Ethereum’s upcoming Merge upgrade and switch to a proof-of-stake (PoS) consensus mechanism-based blockchain.
  • The announcement came on the same day as its stablecoin competitor, who pledged they will only support Ethereum’s highly anticipated upgrade.
  • In a Tuesday statement, Tether labeled the Merge one of the “most significant moments in blockchain history” and outlined that it will work in accordance with Ethereum’s upgrade schedule, which is currently slated to go through on Sept. 19:
  • “Tether believes that in order to avoid any disruption to the community, especially when using our tokens in DeFi projects and platforms, it’s important that the transition to POS is not weaponized to cause confusion and harm within the ecosystem.”

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