Thursday, 28 July 2022

Market Summary

Market Summary 28 July 2022

Bitcoin Price: US$ 22,952.45(+7.99%)
Ethereum Price: US$ 1,635.74 (+12.88%) 


Velocity of Stablecoins, Lido on Polygon

  • Token velocity for stablecoins aims to measure the frequency at which the stablecoins are spent or exchanged. It is calculated as total volume divided by outstanding supply.
  • Since the beginning of this year, DAI has seen the highest token velocity among all major decentralized stablecoins. This means that DAI has consistently recorded higher volumes relative to its outstanding supply, and may indicate users’ preference of using DAI as a medium of exchange to settle transactions.
  • Surprisingly, FEI recorded a peak in token velocity near the end of last year, reaching 0.156 on December 22nd.
  • More recently, velocity for all stablecoins has dipped, as total volumes have decreased. 30-day average velocity for DAI currently stands at 0.046, down from 0.09 on June 1st. During the same period, 30-day average volume for DAI has decreased by 47% from $581 million to $306 million.
  • Other decentralized stablecoins have recorded similar volume and velocity profiles. For example, 30-day average velocity for LUSD currently stands at 0.015, down from 0.031 on June 1st. During the same period, 30-day average volume for LUSD has decreased by 78% from $11.9 million to $2.5 million.
  • Lido issues liquid staking derivatives for ETH 2.0, and allows users to passively earn ETH staking rewards. Users are not required to deposit the minimum required 32 ETH or operate any staking infrastructure.
  • When using Lido to stake ETH on the Ethereum Beacon Chain, users will receive a token (stETH) which represents their staked ETH on a 1:1 basis. Rewards are reflected in the exchange rate between stETH and ETH.
  • The DAO-controlled smart contract stakes these tokens using elected staking providers. As user funds are controlled by the DAO, staking providers never have direct access to user assets.


IMF global outlook suggests dark clouds ahead for crypto

  • The IMF has forecast economic growth to slow from 6.1% last year to 3.2% in 2022, which some believe will have negative consequences for crypto.
  • Investors are warning of further volatility in the digital asset markets as the International Monetary Fund (IMF) forecasts a slowdown in global economic growth.
  • The IMF’s July update on the World Economic Outlook titled “Gloomy and More Uncertain” points to “higher-than-expected inflation,” and a contraction of global output as indicators of incoming poor economic growth. The report states in succinct terms that there are likely economic slowdowns ahead:
  • “The risks to the outlook are overwhelmingly tilted to the downside.”
  • Macro factors have been linked to the crypto bear market, prompting crypto analyst Miles Deutscher to warn his 154,000 Twitter followers to expect volatility in the markets.
  • He noted the incoming earnings reports from Microsoft, Google, Apple and Meta, along with the gross domestic product (GDP) numbers from the United States, could create further turbulence.
  • There are also industry observers who expect the U.S. to be officially in recession when the Q2 GDP figures for the country are published on July 28. Investopedia defines a recession as two consecutive quarters of negative GDP growth.


‘Cryptojacking’ rises 30% to record highs despite crypto slump: Report

  • Cryptojacking has become a lucrative choice for cybercriminals as many victims are unaware they have been compromised.
  • New research shows that despite falling digital asset prices, cryptojacking has reached record levels in the first half of 2022.
  • According to a mid-year update on cyber threats by American cybersecurity company SonicWall, global cryptojacking volumes rose by $66.7 million, or 30%, in the first half of 2022 compared with the same period last year.
  • Cryptojacking is a cybercrime whereby malicious actors commandeer a victim’s computer resources by infecting the machine with malware designed to mine cryptocurrencies. It is often executed through vulnerabilities in web browsers and extensions.
  • The report stated that the overall rise in cryptojacking can be attributed to a couple of factors.
  • Firstly, cybercriminals are leveraging the Log4j vulnerability to deploy attacks in the cloud. In December 2021, a critical vulnerability affecting java-based logging utility was discovered in the Open Source Library managed by software company Apache. Hackers can exploit it to gain remote access to a system.
  • Secondly, cryptojacking is a lower-risk attack than ransomware, which needs to be made public to succeed. Cryptojacking victims are often unaware that their computers or networks have been compromised.
  • Attackers also appeared to have changed their preferred targets during the period, moving from the government, healthcare and education sectors to the retail and financial sectors.


Crypto ATM market value to hit $472 million by 2027 per new data

  • The global cryptocurrency ATM market is projected to grow at a rapid rate over the next five years, as market research predicts the space to be worth half a billion dollars by 2027.
  • Research and Markets published a new report, which estimates a compound annual growth rate of 59% for the industry from 2022 to 2027. It currently values the crypto ATM market at $46.4 million and expects this value to increase to $472 million over a five-year time period.
  • The main drivers of the projected growth include growing remittances and fund transfers in developing countries, fluctuating monetary regulations and an increase in crypto ATM installations around the world.


Cathie Wood sells Coinbase shares amid insider trading allegations

  • One of the largest stockholders of the Coinbase cryptocurrency exchange has dumped a massive amount of shares as regulators reportedly probe the firm for alleged insider trading.
  • Cathie Wood’s investment firm Ark Investment Management has sold a total of more than 1.4 million Coinbase (COIN) shares, according to daily trade information from Ark on July 26.
  • The sale involved three Ark exchange-traded funds (ETF), including Ark Innovation ETF (ARKK), which offloaded a total of 1,133,495 shares, or 0.6% of the ETF’s total assets. Ark Next Generation Internet ETF and Ark Fintech Innovation ETF sold 174,611 and 110,218 COIN shares, respectively. Based on Tuesday’s closing price, the value of the sold shares amounted to slightly more than $75 million.


Ethereum Classic gets ‘endorsement’ from Vitalik Buterin, but ETC price still risks 50% crash

  • Ethereum Classic (ETC) continues to reap benefits from its blockchain rival Ethereum’s upcoming transition from proof-of-work (PoW) to proof-of-stake (PoS). 
  • Notably, ETC’s price jumped by a little over 20% to reach $27.50, two days after Ethereum co-founder Vitalik Buterin’s endorsement of Ethereum Classic went viral across social media. In his comments, Buterin presented the chain as a “fine” PoW alternative to Ethereum.
  • The statements appeared amid fears that Ethereum’s potential network upgrade this September will force PoW miners elsewhere. 
  • Impressively, ETC price has rebounded by over 120% since mid June, making it the standout performer over the past month. Nonetheless, it is still down over 85% versus its May 2021 record high of $185, suggesting that its ongoing retracement move could technically be a bull trap.


Education in crypto payments will spark mass adoption, says exec

  • While many businesses have expressed interest in integrating crypto payments, there are still challenges in terms of understanding the space, said Jess Houlgrave, the head of crypto strategy at
  • Speaking to Cointelegraph, Houlgrave talked about the benefits and challenges of accepting crypto for merchants and shared her thoughts on what can spark and further the mainstream adoption of crypto payments.
  • Houlgrave said that the integration of crypto payments results in an increase in security, speed and efficiency. It could replace traditional payment systems that are plagued with middlemen, high fees, payment delays and fraud risks, she stated.
  • Along with the benefits, Houlgrave highlighted that there are also challenges for businesses in terms of understanding how to account for accepting crypto, learning how to secure custody of crypto profits, managing price volatility and applying for a tax cred. Because of these, the executive explained that firms opt to outsource their crypto payment operations. She said:
  • “Increasingly, merchants are accepting crypto payments via a third party who will convert to, and settle in, fiat so that the merchant doesn’t bear price volatility risk versus their expenses.”


Bitcoin futures data shows ‘improving’ mood’ despite -31% GBTC premium

  • Bitcoin (BTC) traders may be nervous going into the Federal Reserve rate hike decision, but research suggests that the bulls are broadly gaining ground.
  • In a fresh update on July 26, analytics firm Arcane Research flagged what it calls “improving” sentiment among institutional traders.
  • While attention has focused on the likelihood of a deeper macro low for BTC/USD to come, it appears that not every investor cohort is ready to run for the exit.
  • Even at current prices 70% below all-time highs, the mood among institutions is strengthening. For Arcane, the proof is in the rising premium being paid by CME Bitcoin futures clients.
  • “While the basis premium on CME has grown, it’s still just 2.2%, a relatively low level historically. This indicates that although sentiment is improving, traders still exercise caution.”
  • In a similar trend, funding rates across derivatives platforms are currently slightly negative, pointing to a conservative view of future price action on the part of traders. A deeply negative average funding rate would suggest that the overriding view is that a price crash is due.
  • The giant Bitcoin fund still had a negative “premium” of over 30% as of July 27, marking some of its steepest discounts to the Bitcoin spot price in history.


Tether says it holds zero Chinese commercial paper, denies 85% exposure

  • Major stablecoin issuer Tether has reiterated that the company plans to completely rid itself of commercial paper backing for its U.S.-dollar stablecoin USDT.
  • In a blog post on Wednesday, Tether said it “holds no Chinese commercial paper as of today,” while its total commercial paper exposure has been cut to $3.7 billion from $30 billion one year ago.
  • By late August 2022, Tether said it plans to decrease commercial paper exposure to as low as $200 million, targeting zero commercial paper holdings by the end of October, the statement reads.
  • “Tether continues to ensure that it has a diversified portfolio with limits to exposure on individual issuers or assets. Its reduction in commercial paper is a commitment to its community,” the firm said.
  • The post came in response to the ongoing FUD around Tether, with some reports alleging that Tether’s commercial paper portfolio is 85% backed by Chinese or Asian commercial papers. Tether previously denied the reports in mid-June, stating that such allegations were “completely false.


FTC files lawsuit against Meta over attempted monopolization of metaverse

  • The United States Federal Trade Commission, or FTC, has filed a lawsuit against Meta and CEO Mark Zuckerberg in an attempt to stop the social media giant from “its ultimate goal of owning the entire ‘metaverse’.”
  • In a complaint filed in the Northern District of California on Wednesday, the FTC alleged Meta’s and Zuckerberg’s potential acquisition of virtual reality firm Within and its fitness app Supernatural was illegal according to U.S. antitrust laws and a way for the social media firm to “buy its way to the top” as opposed to “competing on the merits.” The complaint alleged that under Zuckerberg, Meta was “a potential entrant in the virtual reality dedicated fitness app market” with the resources necessary to develop its own app, but instead chose to own Supernatural by purchasing Within. The move would allegedly hinder “future innovation and competitive rivalry” among companies in the United States.
  • “As Meta fully recognizes, network effects on a digital platform can cause the platform to become more powerful — and its rivals weaker and less able to seriously compete — as it gains more users, content, and developers,” said the complaint. “The acquisition of new users, content, and developers each feed into one another, creating a self-reinforcing cycle that entrenches the company’s early lead. This market dynamic can spur companies to compete harder in beneficial ways by, for example, adding useful product features or hiring additional employees.”

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