Friday, 11 August 2023

Market Summary

Market Summary 11 August 2023

Bitcoin Price: US$ 29,455.75 (-0.43%)
Ethereum Price: US$ 1,852.47 (-0.16%)  


The Metaverse platform Sandbox has witnessed a notable depreciation in the value of its SAND token as it approaches a consequential token unlock event, slated to release more than 16% of the circulating supply. An intriguing prelude to this unlock materialised when a substantial 60 million SAND tokens were preemptively transferred out of the multisig Sandbox Genesis smart contract a week prior, potentially aimed at preempting undue market turbulence. The customary process of token unlocks, though recognised for introducing latent liquidity into the market, is shadowed by prevailing concerns arising from the token’s recent downtrend. Meanwhile, cryptocurrency exchange Bittrex has resolved its legal entanglements with the SEC, culminating in a settlement that necessitates a $24 million fine for providing unauthorised securities access to U.S. investors. In a parallel narrative, the emergent Worldcoin finds itself under intensified regulatory scrutiny, as the Argentine Agency for Access to Public Information undertakes an investigative examination into the legality of the platform’s data collection practices and its protective privacy protocols, fomenting discourse on compliance with stringent data protection regulations.

The discourse surrounding the tokenisation of real-world assets has witnessed a subtle shift towards skepticism, caution, and pragmatism, contrasting the ambitious projections of a $16 trillion potential by 2030. While analysts forecast a $5 trillion industry for real-world assets, doubts linger regarding the meaningful transformation of finance without substantial credit accessibility. Ralf Kubli of the Casper Association emphasises the importance of standardisation in driving efficiency within financial markets, urging a departure from mere replication of existing practices onto the blockchain. The need for quality and diversified information in financial asset tokenisation is highlighted, aiming to avert the replication of past market pitfalls. In a distinct sphere, Maple Finance offers a haven from inflation and yield through tokenised treasuries, while Backed leverages Chainlink’s decentralised price feeds to bridge traditional finance and blockchain infrastructure. However, lessons are drawn from the cautionary examples of Maple and Goldfinch, emphasising the need for prudent lending practices. Meanwhile, Coinbase Ventures’ strategic investment in Rocket Pool’s RPL token showcases growing confidence in both the protocol and token, exemplifying a connection with promising projects. The Aragon Association’s deliberation over selling the project reflects the intricate challenges associated with decentralised governance and treasury management, while activist investors underscore the emergent role of “risk-free value” trading subculture in shaping the trajectories of crypto projects through governance tokens.

Aave token holders are actively participating in voting for two governance proposals in response to the potential systemic liquidation risk triggered by Curve founder Michael Egorov’s substantial borrowing position on the Aave lending protocol. Proposed by on-chain risk management platform Chaos Labs, these measures intend to disable borrowing of CRV, Curve’s native governance token, on both Ethereum and Polygon V3, while also reducing the liquidation threshold for CRV. The necessity for these votes stems from Egorov’s borrowing on Aave using 34% of CRV’s market cap, which faced liquidation pressure due to a recent Curve exploit. Though Egorov has since raised funds to mitigate the risk, the Aave community is voting on these actions to further safeguard against potential liquidation threats and price volatility. Meanwhile, Binance Labs, the venture capital arm of the prominent crypto exchange, has committed a $5 million investment in the Curve DAO Token (CRV), which powers the Curve decentralised exchange on Ethereum. This strategic collaboration may also see Curve explore deployment on Binance’s BNB Chain. The move comes after Curve experienced a hack of over $70 million. CRV surged 4.8% to 64 cents post-announcement before stabilising at 61 cents. Additionally, the decentralised exchange PancakeSwap has expanded its presence by launching on Ethereum scaling network Arbitrum. This deployment aims to enhance user experience by providing lower fees and faster transactions, as Arbitrum locks over $2 billion worth of tokens and is known for scalability and cost-effectiveness. PancakeSwap, already present on several blockchains, seeks to drive broader participation in the DeFi ecosystem through its continued expansion efforts.

The U.S. Securities and Exchange Commission is poised to potentially approve a series of spot bitcoin exchange-traded funds (ETFs), anticipated to instigate a notable upward trajectory for the world’s primary digital currency, as forecasted by Matrixport, a crypto-services provider. These ETFs are expected to engage in significant marketing campaigns to attract retail and institutional investments, akin to the Grayscale Bitcoin Trust’s prior assets peak of $43.5 billion. Matrixport highlights that a physical bitcoin ETF may entail a management fee of 0.7-1%, potentially generating substantial annual revenues. The SEC’s impending responses to various ETF filings are crucial in determining the cryptocurrency’s future market movement. Simultaneously, the U.S. Consumer Price Index for July aligns with expectations, indicating a stable 0.2% monthly growth(3.2% MoM, 4.7% YoY), possibly influencing the Federal Reserve’s decision on interest rate adjustments. Furthermore, San Francisco-based SoFi bank’s Q2 earnings report reveals a significant increase in its crypto holdings to around $166 million, with substantial investments in Bitcoin, Ethereum, and other cryptocurrencies. Despite these advancements, SoFi’s crypto offering has raised regulatory concerns, drawing attention from U.S. lawmakers and the Federal Reserve.




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