Thursday, 30 June 2022

Market Summary

Market Summary 30 June 2022

Bitcoin Price: US$ 20,123.01 (-0.78%)
Ethereum Price: US$ 1,100.21 (-3.83 %) 


Stablecoin Lending Declines, Hop Protocol, DAO Banking

  • Stablecoin lenders on Aave and Compound saw their yields drop from 2.4-3.7% to 0.8-2.3% since the beginning of this quarter.
  • Alongside yields, the TVL of these stablecoin money markets has also declined. The collective TVL for all markets listed in the chart above has declined by 55%, from $9.6 billion to $4.2 billion, currently.
  • Traders primarily use lending and borrowing platforms in DeFi to borrow stablecoins against crypto asset holdings. The decline in stablecoin lending returns, alongside TVL, may indicate the unwinding of leverage and a decline in liquidity.
  • In general, stablecoin supply has also declined, with circulating supply for DAI and USDT dropping by 33% and 18%, respectively, since the beginning of the quarter.
  • On the other hand, USDC’s circulating supply has increased by 7%, as investors deem it “safer” than Tether. Notably, USDC money markets have also seen the largest decline in lending rates as it captures a higher portion of the stablecoin pie.
  • Hop Protocol is a scalable rollup-to-rollup general token bridge. It allows users to send tokens from one rollup to another almost immediately without having to wait for the rollup’s challenge period. This is done by creating a special intermediary asset called an hToken that can be quickly and economically moved from one network to the next and using AMMs to swap between the hTokens and their corresponding assets on each network.
  • Since DAO’s are early stage and mostly pre-profit, their treasuries are also heavily concentrated in their native tokens, making the health of the protocol more volatile and less likely to be able to weather longer downturns like the bear market we are in now.


US govt delays enforcement of crypto broker reporting requirements: Report

  • The provision in the U.S. infrastructure bill signed into law in November, which will require financial institutions and crypto brokers to report additional information, could reportedly be delayed.
  • According to a Wednesday report from Bloomberg, the United States Department of the Treasury and Internal Revenue Service may not be willing to enforce crypto brokers collecting information on certain transactions starting in January 2023, citing people familiar with the matter. The potential delay could reportedly affect billions of dollars related to capital gains taxes — the Biden administration’s budget for the government for the 2023 fiscal year previously estimated modifying the crypto tax rules could reduce the deficit by roughly $11 billion.
  • Under the current infrastructure bill, Section 6050I mandates that crypto brokers handling digital asset transactions worth more than $10,000 report them to the Internal Revenue Service with personal information likely including the sender’s name, date of birth and social security number. The requirements, aimed at reducing the size of the tax gap, were scheduled to take effect in January 2023, with companies sending reports to the IRS starting in 2024.


It’s time to refocus on crypto infrastructure, CoinShares CSO says

  • The ongoing cryptocurrency market decline is the right time for the community to strengthen infrastructure fundamentals, according to the chief strategy officer at the European digital asset manager CoinShares.
  • CoinShares is one of the largest digital asset investment firms in Europe, with net assets exceeding $260 million by the end of 2021. According to CoinShares’ latest fund flows weekly report, digital asset investment products saw outflows totaling $423 million last week, the largest since records began by a wide margin.
  • The report noted that the outflows were likely responsible for Bitcoin’s (BTC) decline to $17,760 on June 18, marking the lowest price level recorded since 2020. A more resilient infrastructure of crypto and decentralized finance will not only help ensure security but also would enable more decentralization, Demirors said in an exclusive interview with Cointelegraph on June 9.


Bitcoin holds $20K as ECB warns inflation may never return to pre-COVID lows

  • Bitcoin (BTC) held steady at just above $20,000 after the June 29 Wall Street open as Europe’s chief banker admitted the world would “never” return to low inflation.
  • United States equities markets were likewise calm after Asian trading had seen fresh losses. In Europe, meanwhile, comments from central bankers set the macro tone.
  • In particular, Christine Lagarde, head of the European Central Bank (ECB), appeared to state that inflation would remain high indefinitely.
  • “I don’t think we’re going back to that period of low inflation,” she said during a press conference at the ongoing ECB Forum event in Sintra, Portugal.
  • Joining her was Fed Chair, Jerome Powell, who sounded similarly downbeat on the prognosis while promising to not rest until inflation matched the bank’s 2% target.
  • “That is our aim, that is our intention; we think there are various pathways to achieve that, to achieve the path back to 2% inflation while sustaining a strong labor market. We believe we can do that, that’s our aim; there’s no guarantee that we can do that,” he said.


Lending network enables transparent credit history in Africa via blockchain partnership

  • African mobile banking platform Aella has partnered with Creditcoin Network to make credit histories transparent by integrating all its transactions into Creditcoin’s public blockchain.
  • In an announcement sent to Cointelegraph, Creditcoin said that all Aella’s credit transactions will be recorded on the Creditcoin blockchain, making it easy to audit and available for viewing through their block explorer. The recorded transactions will include the terms of the loans as well as payments and repayments.
  • Creditcoin said that the partnership comes with the release of Creditcoin 2.0, an upgrade that makes the network more stable and easier to integrate with.
  • Aella CEO Akin Jones highlighted that the move allows investors to monitor the performance of its business in real time by looking at the blockchain. This may eventually lead to more capital raises and contributes to giving more Africans access to credit. Jones explained that:
  • “For us, and millions of users across Africa, that means more and cheaper access to vital sources of credit.”


MicroStrategy scoops up 480 Bitcoin amid market slump

  • Business intelligence firm MicroStrategy has added to its Bitcoin (BTC) holdings, reaffirming CEO Michael Saylor’s bullish outlook on the digital asset despite its recent struggles. 
  • In a Form 8-K filing with the United States Securities and Exchange Commission (SEC), Microstrategy disclosed that it had acquired an additional 480 BTC at an average price of roughly $20,817. The total purchase amount was $10 million in cash.
  • With the purchase, MicroStrategy now holds 129,699 BTC, making it the largest corporate holder of Bitcoin. The total value of its holdings is roughly $3.98 billion.
  • The business intelligence firm is scooping up Bitcoin during a period of extreme market volatility. On Wednesday, Bitcoin’s price briefly dipped below $20,000, which is more than $10,000 lower than the company’s average acquisition price. The company’s BTC stash is currently sitting at a net unrealized loss of nearly $1.4 billion, according to data provided by Bitcoin Treasuries.


21Shares responds to bear market with crypto winter ETP

  • 21Shares, a global issuer of crypto exchange-traded products (ETPs), is taking action to respond to the current bear market by launching crypto winter-focused investment tools.
  • The company has rolled out the 21Shares Bitcoin Core ETP (CBTC), an ETP specifically designed to offer low-cost exposure to Bitcoin (BTC) to the ongoing market sell-off.
  • The physically-backed Bitcoin ETP started trading on the SIX Swiss Exchange on Wednesday, with a total expense ratio of 21 basis points, selected to reflect the 21 million cap on Bitcoin. According to the firm, CBTC’s ratio is 44 basis points below the next lowest product on the market.


Bitcoin Lightning Network developer updates node software with Taproot support

  • Lightning Labs, a developer of the Bitcoin (BTC) Lightning Network (LN), released a beta version of the Lightning Network Daemon (lnd) — a complete implementation of the LN node — with added support to the latest protocol upgrades including Taproot and Musig2, among other improvements.
  • lnd is a software component that handles various aspects within the LN including managing a database, generating payment invoices and revoking payments, to name a few. The latest software release, named lnd 0.15 beta (v0.15-beta), aims to empower developers to create solutions for more use cases by leveraging the Bitcoin network’s latest capabilities.
  • In the announcement, Lightning Labs’ product growth lead Michael Levin revealed that over 50 contributors participated in launching the company’s first release in the year 2022, adding that:
  • “This release gives complete Taproot support for the internal lnd wallet, making it one of the most advanced Taproot wallets today. Further, this release has support for an experimental Musig2 API compliant with the latest BIP draft.”


British Virgin Islands court reportedly orders to liquidate 3AC

  • Troubled cryptocurrency venture capital firm Three Arrows Capital (3AC) is facing more uncertainty amid new reports on the company’s liquidation.
  • A court in the British Virgin Islands ordered the liquidation of Singapore-based 3AC on Monday, the British news agency Sky News reported on Wednesday.
  • The information in the report refers to an unspecified person familiar with the matter. Three Arrows Capital did not immediately respond to Cointelegraph’s request for comment.
  • Three Arrows Capital, also known as 3AC, is a Singaporean crypto hedge fund founded in 2012 by Kyle Davies and Su Zhu. The firm has reportedly failed to meet margin calls from its lenders amid a massive market downturn this year, with Bitcoin (BTC) dropping below $20,000 for the first time in two years. 3AC reportedly borrowed BTC From crypto lending firm BlockFi but was unable to meet a margin call due to the bear market.
  • The VC firm was estimated to have incurred $400 million in liquidations across multiple positions.
  • While the reports triggered rumors about 3AC’s insolvency, the company’s founders continued to assure customers that they will do their best to find an equitable solution. The firm hired legal and financial advisers to explore solutions like asset sales and a rescue package by another firm, Davies said. “We have always been believers in crypto and we still are,” he added.

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