Monday, 8 August 2022

Market Summary

Market Summary 8 August 2022

Bitcoin Price: US$ 23,174.39 (+0.96%)
Ethereum Price: US$ 1,700.19 (+0.57%) 


Elon Musk: US ’past peak inflation’ after Tesla sells 90% of Bitcoin

  • Bitcoin (BTC) is in short supply at Tesla, even as its CEO predicts that United States inflation has already peaked.
  • Speaking at Tesla’s 2022 Annual Meeting of Stockholders on Aug. 5, Elon Musk predicted that an upcoming United States recession would only be “mild to moderate.”
  • After recently selling almost all of its $1.5 billion in BTC holdings, Tesla is seeing the emergence of exactly the kind of economic landscape in which risk assets thrive.
  • During a Q&A session at the annual meeting, Musk revealed that six-month commodities pricing for Tesla parts is already getting cheaper, not more expensive.
  • Commodities, he said, are trending down, providing a hint that inflation has already hit its highest levels.
  • “We sort of have some insight into where prices are headed over time, and the interesting thing that we’re seeing now is that most of our commodities, most of the things that go into a Tesla — not all, more than half the prices — are trending down in six months from now,” Musk said.
  • “This could change, obviously, but the trend is down, which suggests that we are past peak inflation.”
  • The recovery from an inflationary period with commodities heading downhill provides fertile ground for a recovery in risk assets, including crypto. Theoretically, this comes as a result of lower inflation meaning less tightening by the U.S. Federal Reserve, providing favorable conditions for risk-on investments.
  • Should strength return to markets and crypto outperforms, the trend will be an ironic one for Tesla, which divested itself of practically all its BTC exposure — at a profit of just $64 million — last month.
  • At the time, Musk added that BTC could return to the firm’s balance sheet at a later date, and that the decision was not a commentary on Bitcoin per se.


Amid miner capitulation, Hut 8 maintained BTC ‘HODL strategy’ in July

  • Canadian Bitcoin (BTC) miner Hut 8 Mining Corp. added to its massive BTC reserves in July, as the firm maintained its long-term “HODL strategy” in the face of market volatility.
  • The Alberta-based company generated 330 Bitcoin in July at an average production rate of 10.61 BTC per day, bringing its total reserves to 7,736 BTC. Its monthly production rate was equivalent to 113.01 BTC per exahash, the company disclosed Friday.
  • Hut 8, which trades on the Nasdaq and Toronto stock exchanges, is one of the largest public holders of Bitcoin, according to industry data.
  • As part of its ongoing HODL strategy, Hut 8 deposited all of its self-mined Bitcoin into custody, bucking the growing industry trend of miners selling portions of their reserves during the bear market. As Cointelegraph reported, Texas miner Core Scientific sold 7,202 BTC in June at an average price of $23,000 to pay for servers and settle debts. The company recouped 1,221 BTC the following month after increasing its mining output by 10%.


Core Scientific increased Bitcoin production by 10% in July amid Texas power cuts

  • Crypto mining firm Core Scientific reported its operations produced 1,221 Bitcoin (BTC) in July even as the company powered down several times in response to demand on the Texas power grid.
  • In a Friday announcement, Core Scientific said its month-over-month Bitcoin production had increased from 1,106 in June to 1,221 in July — roughly 10.4%. The firm reported curtailing operations “due to extreme temperatures at multiple data centers,” but also increased the number of its self-mining servers and hashrate by 6%, to 109,000 and 10.9 exahashes per second (EH/s), respectively.
  • According to Core Scientific, the company “completely powered-down its Texas data center operations on several occasions” in July to support the Electric Reliability Council of Texas, or ERCOT, which controls the state’s power grid. The firm reported curtailing its power demands by 8,157 megawatt hours (MWh).


Voyager plans to resume cash withdrawals on Aug. 11

  • Crypto lender Voyager Digital Holdings has reported users may be able to make cash withdrawals from the app more than a month after suspending trading, deposits, withdrawals and loyalty rewards.
  • In a Friday blog post, Voyager said clients with U.S. dollars in their accounts could withdraw up to $100,000 in a 24-hour period starting as early as Aug. 11, with the funds received in 5–10 business days. The announcement followed a judge ruling on Thursday the crypto lending firm was cleared to return $270 million in customer funds held at the Metropolitan Commercial Bank in New York.
  • “Requests will be processed as quickly as possible but will require some manual review, including fraud reviews and account reconciliation, and timing will depend, in part, upon the individual banks to which customers transfer their cash,” said Voyager.


Indian authorities freeze $8.1M in WazirX funds as part of AML investigation

  • India’s Directorate of Enforcement, or ED, has announced it froze roughly $8.1 million in funds and conducted a search connected to cryptocurrency exchange WazirX as part of an investigation into instant personal loan fraud.
  • In a Friday announcement, the Directorate of Enforcement alleged WazirX facilitated transactions by unnamed fintech firms “to purchase crypto assets and then launder them abroad” as part of a scheme involving Chinese-backed companies circumventing India’s licensing regulations. In its investigation, the ED said it ordered WazirX bank accounts containing 646.7 million Indian rupees — roughly $8.1 million at the time of publication — frozen and conducted a search connected to co-founder Sameer Mhatre.
  • According to the regulator, the investigation was still ongoing. However, the ED claimed the crypto exchange had “lax KYC norms” and “loose regulatory control” of transactions between WazirX and Binance, and did not record the information needed to verify the origin of the funds used to purchase crypto in the alleged fraud.
  • “Despite giving repeated opportunities, WazirX failed to give the crypto transactions of the suspect fintech APP companies and reveal the KYC of the wallets,” said the ED, adding:
  • “WazirX is not able to give any account for the missing crypto assets. It has made no efforts to trace these crypto assets. By encouraging obscurity and having lax AML norms, it has actively assisted around 16 accused fintech companies in laundering the proceeds of crime using the crypto route.”


Argo Blockchain keeps cashing out BTC to pay the debt to Galaxy Digital

  • Cryptocurrency mining firm Argo Blockchain continues to sell its Bitcoin (BTC) holdings to cut its debt to Michael Novogratz’s crypto investment firm Galaxy Digital.
  • Argo sold another 887 Bitcoin in July to reduce obligations under a BTC-backed loan agreement with Galaxy Digital, the firm announced on Friday.
  • With the average BTC price of $22,670, the sales totaled $20.1 million, accounting for a significant part of the maximum outstanding loan balance of $50 million in Q2 2022. As of July 31, 2022, Argo held an outstanding balance of just $6.72 million under the BTC-backed loan, the announcement notes.
  • The latest sale comes shortly after Argo sold another 637 BTC in June 2022 for $15.6 million. The firm reported that by the end of June 30, Argo had an outstanding balance of $22 million on the loan.
  • Despite actively cashing out its Bitcoin over the past few months, Argo still holds a notable stash of Bitcoin. As of July 31, 2022, Argo held a total of 1,295 BTC, with 227 of those represented by BTC equivalents.


Glassnode: Market Pulse: Are Bitcoin Long-Term Holders Spending Their Coins?

  • Despite all the uncertainties in the macro landscape, cryptocurrency markets have experienced a meaningful recovery since mid-July. Bitcoin prices have reclaimed two psychologically significant levels, including the 200 WMA, Long-Term Holders’ Cost Basis (LTH-Cost Basis), and Market Averaged Cost Basis (Realized Price), briefly touching the ~24k level.
  • The LTH-Cost Basis is currently trading at $22.6k, which indicates this cohort is currently holding coins at a 1% loss, considering the market price of $22.3k at the time of writing.
  • In response, over the last three weeks, the aggregated behaviour of Long-Term Holders has changed from accumulating at a rate of 79k BTC/month, to distributing up to -47k BTC/month. Remarkably, this cohort seized the opportunity of rallying prices and spent 41k BTC, or 0.3% of their supply, over the last 21 days. (Note that net spending is defined as Accumulation plus HODLing minus Distribution).

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