Tuesday, 4 July 2023

Market Summary

Market Summary 4 July 2023

Bitcoin Price: US$ 31,156.20 (+1.76%)
Ethereum Price: US$ 1,955.54 (+0.93%)  


In a surprising twist, the founders of the bankrupt crypto hedge fund Three Arrows Capital (3AC) have pledged to donate their future earnings to the creditors who suffered losses when the fund collapsed last year. Kyle Davies, one of the founders, announced this plan during a Twitter Spaces session hosted by Mario Nafwal, referring to it as a “shadow recovery process” separate from the ongoing liquidation proceedings. However, skeptics within the crypto community and among the creditors remain cautious, given the founders’ previous lack of cooperation with the formal recovery efforts. The call for caution comes as key indicators suggest upcoming liquidity challenges in fiat markets, despite the recent rally in financial markets and cryptocurrencies such as Bitcoin. While Bitcoin has experienced a significant price increase, reaching $31,000 and benefiting from the interest shown by institutions like Fidelity in a spot-bitcoin ETF, indicators show decreasing fiat liquidity globally and within the US. This decline in liquidity raises concerns about risk aversion and potential market instability. In Europe, the controversial European Data Act has moved forward, despite criticism from the crypto community. The act includes provisions for a kill switch option in smart contracts, allowing safe termination, which contradicts the notion of trust associated with such contracts. On a more positive note, the European Commission proposed a legislative plan for a digital euro, aiming to enhance accessibility and ease of use. Additionally, Slovakia’s National Council approved a tax reduction on profits from the sale of cryptocurrencies held for at least one year, providing a boost to the local crypto landscape.

Gemini co-founder Cameron Winklevoss has presented what he claims to be a “final offer” in the debt-restructuring negotiations for Genesis, the bankrupt digital asset firm owned by Digital Currency Group (DCG) founder Barry Silbert. Winklevoss seeks to bring an end to prolonged discussions and mediation by proposing a resolution that includes $1.465 billion in forbearance payments and fresh loans in USD, Bitcoin, and Ethereum. In an open letter to Silbert, Winklevoss expresses frustration with DCG’s delay in formulating a satisfactory repayment plan and accuses the enterprise of fraudulent behavior and fostering a culture of dishonesty. Meanwhile, the crypto asset management industry has witnessed strong weekly inflows for the second consecutive week, with CoinShares reporting $125 million flowing into the sector last week, bringing the total inflows to $334 million over the past two weeks. The majority of these inflows are attributed to Bitcoin investment products, while short-bitcoin investment products experienced outflows of $0.9 million. This surge in inflows marks a turnaround for the industry, which previously saw several weeks of outflows but has since been fueled by a market rally following new spot exchange-traded fund filings awaiting review by the U.S. Securities and Exchange Commission. Additionally, Luminex, the launchpad platform for Bitcoin Ordinals, has proposed the BRC-69 standard, aiming to simplify the creation of Recursive Ordinals collections on the Bitcoin blockchain. This standard would significantly reduce inscription costs by over 90% and streamline the on-chain pre-reveal process, enabling more efficient utilisation of the Bitcoin block space as the number of inscriptions grows.

A group of Ethereum community members has put forth a proposal for a new standard, ERC 7265, aimed at enhancing the security of decentralised finance (DeFi) protocols. The standard introduces a “circuit breaker” feature that allows DeFi protocols to easily integrate a safeguard into their smart contracts. In the event of a hack, the circuit breaker would prevent tokens from leaving the contracts, mitigating potential losses. This proposal comes in response to the increasing number of DeFi hacks, with attackers having already stolen nearly $3 billion from DeFi protocols. The proposed standard aims to address the vulnerabilities in the DeFi space and prevent catastrophic losses. Meanwhile, the value of assets staked in Solana’s liquid staking protocols has experienced a significant surge of 91% since the beginning of the year. Liquid staking protocols such as Marinade Finance, Lido, Jito, JPool, and Socean have collectively held $187 million worth of staked Solana (SOL) tokens by the end of June, constituting 69% of the network’s total value locked. This growth can be attributed to the broader trend of liquid staking derivatives gaining traction in the crypto space, following Ethereum’s Shapella upgrade. In another development, the crypto market rally sparked by BlackRock’s unexpected filing for a spot bitcoin exchange-traded fund has resulted in substantial inflows into ProShares’ BITO futures-based fund. The fund witnessed additional inflows of $14.9 million on June 29 and $11.9 million on July 3, pushing its total assets under management to over $1 billion. This surge in inflows is indicative of the renewed interest and confidence in the crypto market.





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