Monday, 21 August 2023

Market Summary

Market Summary 21 August 2023

Bitcoin Price: US$ 26,189.99 (+0.34%)
Ethereum Price: US$ 1,685.24 (+0.93%)  


In the aftermath of the recent Curve exploit, the NFT-backed loans protocol known as JPEG’d, which had previously suffered a significant loss of approximately $12 million in cryptocurrency and paid a $1 million bounty to recover most of it, now faces the crucial decision of addressing the remaining deficit. JPEG’d, a crypto lending app collateralised by NFTs, had customers who had staked their assets in a Curve liquidity pool, only to witness their investments drained by an exploiter. JPEG’d ultimately paid a substantial bounty to the exploiter to salvage the protocol and protect its users from total losses. In a current vote, investors overseeing the JPEG’d DAO are deliberating between six proposals to address the outstanding deficit, with the leading option, labeled option D, distributing the burden between non-paying customers and the DAO itself, resulting in a net loss of 484 ETH and 861 million JPEG tokens. Meanwhile, in the Bitcoin futures market, funding rates plummeted as a sudden price drop jeopardised short volatility positions. This decline in funding rates on major platforms like OKX, Deribit, and Bybit correlated with Bitcoin’s price dip to $25,392, prompting speculation that traders who had previously shorted options were hedging their risk by selling perpetual futures, exacerbating the market downturn. Deribit, which dominates the crypto options market, experienced a significant discount in its BTC perpetual futures compared to spot prices. The exchange has since adjusted its liquidation policy to address such scenarios more effectively. Lastly, Ripple Labs’ CTO, David Schwartz, shed light on the ongoing legal battle with the SEC regarding XRP. The SEC has filed an appeal, contending that the case has not yet concluded, which allows for appeals even before the final verdict is reached. Ripple, on the other hand, insists that the main lawsuit should proceed concurrently with the appeal process to avoid prolonging the legal proceedings unnecessarily. This dispute underscores the complexity of the case and the differing perspectives on its handling.

Gemini, the cryptocurrency exchange, has responded with a brief in its ongoing legal battle against the United States Securities and Exchange Commission (SEC), seeking to dismiss the lawsuit which alleges regulatory violations related to its service Gemini Earn. Citing lack of clarity in the SEC’s claims and emphasising the need for a straightforward approach, Gemini contends that the agency has not clearly outlined the basis for its allegations, particularly concerning the requirements of Section 5 of the securities act. Meanwhile, a recent CoinGecko report highlights stark global disparities in Bitcoin mining costs, revealing Italy’s high expense of $208,560 per Bitcoin compared to Lebanon’s significantly cheaper $266. In other news, DeFi protocols Exactly and Harbor experienced separate attacks resulting in substantial financial losses, further underscoring the vulnerability of digital financial systems.

The United States Securities and Exchange Commission (SEC) is poised to approve multiple applications for Ether futures exchange-traded funds (ETFs) concurrently, representing a significant development in the cryptocurrency investment landscape. With over 16 applications awaiting regulatory approval, the SEC’s decision not to request the withdrawal of any applications, unlike in 2021, signals a favorable stance toward the launch of these ETFs, which would enable investors to indirectly access cryptocurrencies like Ether through futures contracts. This comes as the SEC continues to deliberate on the approval of a spot Bitcoin ETF, with major players like Fidelity and BlackRock waiting for regulatory clearance. In another financial analysis, concerns are raised about deflation in China and its potential implications for Bitcoin. Analyst Marcel Pechman discusses the expansion of the United States Federal Reserve’s balance sheet and its connection to inflation dynamics, advising caution for investors holding assets like Bitcoin. Furthermore, Bitcoin Ordinals nonfungible tokens (NFTs) have experienced a substantial decline in trading volume, with a 98% drop since May, raising questions about the long-term viability of Bitcoin-based NFTs in the evolving NFT ecosystem.

Creators of the Bored Ape Yacht Club (BAYC), Yuga Labs, have announced their decision to reduce support for OpenSea, a prominent NFT marketplace, due to OpenSea’s upcoming removal of the Operator Filter tool, designed to enforce royalties on secondary NFT sales. OpenSea cited a lack of broad ecosystem adoption and creator opposition as reasons for discontinuing the tool. Yuga Labs, which is committed to safeguarding creator royalties, will gradually phase out its use of OpenSea’s Seaport marketplace smart contract by February 2024, aligning with OpenSea’s approach. Meanwhile, IBM Automation’s Chief Technology Officer, Jerry Cuomo, has raised concerns about using ChatGPT for enterprise, emphasising potential data privacy and legal risks, suggesting that ChatGPT may not be suitable for sensitive information. Additionally, Coinbase’s offshore derivatives exchange has experienced a notable surge in trading volumes, nearing $300 million per day since its launch in May, underscoring the growth of cryptocurrency trading markets despite regulatory challenges and legal disputes.




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