Wednesday, 9 November 2022

Market Summary

Market Summary 9 November 2022

Bitcoin Price: US$ 18,547.23 (-9.93%)
Ethereum Price: US$ 1,334.77 (-14.88%) 

 

stETH on Ethereum Bridges Skyrockets

  • US authorities announce that they’ve seized $3.36B worth of BTC in connection with the Silk Road marketplace.
  • Binance signs a non-binding agreement to acquire FTX.
  • A US Federal Judge rules that LBRY violated securities laws by selling LBC tokens without registering with the SEC.
  • BitDAO asks Alameda Research for proof of holdings following BIT’s sudden 20% drop.
  • The Central Bank of Russia plans on integrating crypto assets into their local financial system.
  • Lido Finance deployed on Aribtrum and Optimism on Oct. 7. Since then, the amount of stETH held in Ethereum bridges has surged by over 700%.
  • Since the launch, the Arbitrum bridge has accumulated 7.6K stETH while the Optimism bridge has accumulated 7.1K stETH.
  • Since Sep. 1, the total amount of ETH staked with Lido grew from 4.16M to 4.52M, an increase of 8.7%. The week of Oct. 24 saw the largest amount of ETH staked since May.
  • A driving force behind the increased bridge and staking activity is LDO rewards. Lido is distributing 160K LDO on Optimism and 150K LDO on Arbitrum this month as it strives for more L2 integrations.
  • The rewards program aims to generate wstETH liquidity on Curve, Balancer, Kyber, Beethoven X, Beefy, and Velodrome.
  • ETH deposits to Lido surged from 8.5K ETH in the first half of September to 69.3K ETH in the latter half of the month. This was partly encouraged by stETH returning to parity with ETH.

 

Circle CEO Allaire calls FTX crisis crypto’s ‘Lehman Brothers’ moment

  • Jeremy Allaire, co-founder and CEO of Circle, said the FTX insolvency crisis, which has thrown the crypto market into turmoil, is the “Lehman Brothers” moment for crypto.
  • “Finally, as someone who’s been involved in this industry for 10 years, it is disappointing that a technology that was spawned in reaction to the Lehman Bros. moment of 2008 has given rise to its own version of the same,” he said. Lehman Brothers, of course, helped set off the 2008 global financial crisis.
  • Allaire said Circle’s USDC is not impacted by the crisis. It’s the largest stablecoin in the crypto markets, and any contagion that could negatively affect it would be catastrophic. But Allaire emphasized that Circle has been regulated across many parts of the world since 2014, and USDC is fully backed by government treasury bonds and cash. He went on to tweet that USDC has “detailed transparency” and is trusted by many of the top asset managers and custodians around the world.

 

Feds Update Tornado Cash Sanctions, Cite North Korea’s Nuclear Weapons Program

  • The U.S. Treasury Department today updated its sanctions on Ethereum coin mixer Tornado Cash, citing its role in North Korea’s nuclear weapons program. 
  • The Feds in August banned U.S. citizens from using the mixer, claiming that criminals—including North Korean hackers—were using it to launder dirty funds. 
  • Though in a Tuesday announcement, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) redesignated Tornado Cash, citing “its role in enabling malicious cyber activities, which ultimately support the DPRK’s [Democratic People’s Republic of Korea] WMD [weapons of mass destruction] program.”

 

Yuga Labs, Circle, SkyBridge Among Investments FTX Ventures Made Prior to Liquidity Issues

  • The venture capital arm of cryptocurrency exchange FTX has been a prominent investor in some of the biggest names in the crypto ecosystem. With Binance’s possible acquisition of its rival FTX, questions swirl around what will happen to these investments.
  • Among the biggest names in which FTX Ventures invested were Bored Ape Yacht Club creator Yuga Labs, USDC stablecoin issuer Circle, layer 1 blockchains Near Protocol and Sui, crypto lender BlockFi and two different funding rounds for the Aptos blockchain, according to crypto data analytics firm Cryptorank. The exact number of investments by FTX Ventures are unknown.
  • FTX has been linked closely with the embattled BlockFi. The U.S. arm of FTX gave the strained lender a $400 million credit line with FTX getting the option to acquire BlockFi for up to $240 million.

 

FTX’s Bankman-Fried gets Binance bailout in stunning reversal of fortune

  • FTX CEO Sam Bankman-Fried shocked the crypto universe on Tuesday with an announcement that the exchange’s non-U.S. assets would be sold to Binance.
  • Deal came just one day after Bankman-Fried said exchange was “fine.”
  • Crypto market declined in blood bath after news.
  • “There is a significant liquidity crunch,” he wrote in a Twitter thread. “To protect users, we signed a non-binding LOI, intending to fully acquire FTX.com.”
  • The sale is subject to due diligence, which Zhao said would begin in the coming days. On Monday, he rejected depictions of a tiff between the two exchanges and “conspiracy theories” alleging he had somehow orchestrated the chain of events.
  • “Sorry to disappoint, but I spend my energy building, not fighting,” he wrote a day before the news of the buyout came. The Block reported earlier on Tuesday that FTX had been looking to raise outside capital at a valuation of $10 billion to $20 billion prior to announcing the deal with Binance.
  • The trouble for FTX took an ominous turn on Sunday after Binance said it would sell the position in FTT it acquired when it sold its stake in FTX last year. The move followed a CoinDesk report that Alameda held $3.66 billion in “unlocked FTT,” and traders had worried about the impact of a declining price that has now plunged about 81% in the past week to $4.95, according to CoinGecko.

 

Here’s What Crypto Traders Expect From the Midterms

  • Republicans are increasingly confident they will take control of the U.S. Congress and it could be bullish for crypto, according to some analysts and traders.
  • After two years of Democratic Party control of the U.S. presidency and both legislative chambers, Republicans look poised to take control of the House of Representatives and maybe the Senate in Tuesday’s midterm elections.
  • The state of the economy plays a big role in whether people are happy with their government. Right now things could be better, with inflation still roughly four times the Federal Reserve’s 2% target. Republicans have pinned much of the blame on President Joe Biden and his coronavirus pandemic stimulus packages.
  • “This was the largest fiscal and monetary response in history and that’s great, but elements of how it was delivered weren’t the best and we probably overdid it,” Brett Ryan, senior U.S. economist at Deutsche Bank, told Politico earlier this year. On the other hand, Alan S. Blinder, former vice chairman of the Federal Reserve, wrote in the Wall Street Journal in June that inflation started rising because of COVID-19, oil prices and food prices, and “not because of anything Mr. Biden did.”

 

Coinbase and Kraken experience limited services amid markets turbulence

  • Both Coinbase’s and Kraken’s platforms were down or experiencing intermittent latency issues on Nov. 8 amid market turbulence, according to users’ complaints on Twitter. The news followed the day’s earlier revelation that crypto exchange Binance intends to acquire its rival FTX.
  • According to Twitter users, services were limited on both exchanges, with issues related to connectivity to the platforms and unconfirmed rumors of halted withdrawals.
  • On its support profile, Coinbase said it was “experiencing network connection issues for Coinbase.com, Coinbase Pro, and Coinbase Prime. This could result in difficulty signing in. If you’re already signed in you may experience slow loading across web and the mobile app.” The exchange claimed that the issue was related to the high level of new user sign-ups and transfers to the platform on Nov. 8.
  • Kraken did not comment on the issues via its public channels but highlighted that it uses proof-of-reserves audits, enabling clients to verify balances held on the exchanges and its backed assets as well. 

 

Ethereum Shanghai upgrade: EIP-3651 to cut gas fees for key network participants

  • Ethereum’s Shanghai upgrade, the next major upgrade post Merge, is slated for the second half of 2023. The upgrade would be a key milestone as it would allow holders who have staked their Ether for years to withdraw them systematically and make the network more scalable.
  • Apart from some of the major scalability upgrades, the key event would also tuck in a few minor Ethereum improvement proposals (EIPs), including EIP-3651, EIP-3855 and EIP-3860. Among all the upcoming improvement proposals, EIP-3651, called WARM Coinbase, could be a game changer that could reduce network fees for some of the key network participants called builders.
  • Coinbase here is the name of the software that builders use to receive new tokens on the network. Every new transaction on the platform needs to interact with the Coinbase software multiple times, The first interaction costs more as the software needs to “warm” up, and then the fees decline as the interactions increase. However, with the introduction of EIP-3651, the Coinbase software will remain warm to begin with, thus requiring a lower gas fee to access it.

 

Investors increasingly confident of Ripple’s victory over SEC: CoinShares

  • Recent developments in the Ripple vs. Securities and Exchange Commission (SEC) case appear to have bolstered investor confidence in XRP-tied investment products, according to investment data from CoinShares’ head of research, James Butterfill. 
  • In its latest Digital Asset Fund Flows published on Nov. 7, Butterfill noted that XRP investment products have seen a third consecutive week of institutional inflows, clocking $1.1 million.
  • Butterfill said the figures imply “improving investor confidence as the SEC case against Ripple looks increasingly fragile.”
  • The last few weeks have seen Ripple Labs gaining increasing support from heavy hitters in the crypto industry including Coinbase and the Blockchain Association. 

 

‘Do not delay’ — ASIC warns Aussies to look for 10 signs of a crypto scam

  • Australia’s market regulator has released a list of the “top-10 ways to spot a crypto scam,” amid a detected rise in crypto-related investment scams this year.
  • The Australian Securities and Investment Commission’s (ASIC) public advisory statement was published as part of Scams Awareness Week 2022, an initiative that teaches Australians how to identify all forms of scams. The campaign takes place between Nov. 7 to 11.
  • ASIC said that Australians had already lost more through “investment scams” in 2022 than the total $701 million figure in 2021, while ASIC Deputy Chair Sarah Court attributed cryptocurrencies to the steep incline in investment scams over the last two to three years:
  • “The main driver of the increase was cryptocurrency investment scams, where losses increased by 270%. The ACCC have advised that losses to crypto scams have increased further in 2022.”
  • As part of the advisory, ASIC stated that cryptocurrency scams fall into three categories. The first relates to scams where the victim believes to be investing in a legitimate asset. However, the crypto app, exchange, or website turns out to be fake.
  • The second scam involves fake crypto tokens used to facilitate money laundering activities, while the third type of scam involves the use of cryptocurrency to make fraudulent payments.
  • ASIC says top signs of a crypto scam include “receiving an offer out of the blue,” “fake celebrity advertisements” and being asked by a “romantic partner you only know on-line” to send money in crypto.
  • Other red flags include being asked to pay for financial services in crypto, being asked to pay more money to access funds, withholding investment earnings “for tax purposes” or being offered “free money” or “guaranteed” investment returns.
  • The markets regulator also said it was common for scammers to pressure victims into transferring crypto to their website. To prevent this issue, ASIC also advised crypto investors not to use web apps that aren’t listed on Apple Store or Google Play.
  • Other things to look out for is if “strange tokens appear in your digital wallet,” said ASIC.
  • If scammed, Court strongly advised victims not “to send any more money” to the scammer and to “block all contact” from them if their identity is known:
  • “Do not delay. Contact your bank or financial institution immediately to report the scam. Ask them to stop any transactions. Also, warn your family and friends so they can watch out for potential follow-up scams.”

 

Glassnode

  • Total liquidations in #Bitcoin futures markets have surpassed $121M during the recent sell-off, with the vast majority ($106M) being long positions.

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