Latest Bitcoin and Cryptocurrency News

Ethereum ETF Flows Turn Positive as Grayscale Outflows Surpass $2 Billion

by mei August 2, 2024

written by mei 6 minutes read

Ethereum ETF Flows Turn Positive

Ethereum ETF flows have turned positive again, even though Grayscale’s outflows have gone over $2 billion. On August 1, Ether ETFs showed a net inflow of $26.7 million. This was mainly due to BlackRock’s iShares Ethereum Trust, which had an $89.6 million inflow, according to Faride Investors data.

Positive Flows for Ether ETFs

Daily net inflows into U.S. spot Ether exchange-traded funds (ETFs) flipped positive again, despite Grayscale Ethereum Trust (ETHE) experiencing significant outflows. On August 1, Ether (ETH) ETFs posted a net inflow of $26.7 million. This positive change was led by BlackRock’s iShares Ethereum Trust (ETHA), which saw a substantial inflow of $89.6 million.

Grayscale’s Ethereum Trust, however, faced outflows of $78 million on the same day. This brought the cumulative outflows from Grayscale’s fund to just over $2 billion since it converted to a spot ETF.

Background on Grayscale’s Ethereum Trust

Before its conversion, Grayscale’s Ethereum Trust was not a traditional ETF. It was a trust that offered institutional investors exposure to Ether. At its peak, ETHE held $9 billion worth of Ether. Since its conversion, the fund has seen outflows that now total more than 22% of its initial value as of August 1.

Expert Opinions

Mads Eberhardt, a senior analyst at Steno Research, mentioned that the massive outflows from Grayscale’s ETHE might start to slow down by the end of the week. He believes that these slowed outflows could be a bullish catalyst for the price of ETH. “When it does, it’s up only from there,” Eberhardt wrote in a July 30 post to X.

Will Cai, head of indexes at Kaiko, also commented on the situation. He said that the price of ETH would be “sensitive” to the inflows into the spot products. Reflecting this sensitivity, ETH was trading at $3,150 at the time of publication, having fallen 8.5% since the ETFs launched, according to TradingView data.

Impact on Ethereum Price

The fluctuations in ETF inflows and outflows have a noticeable impact on the price of Ethereum. The positive inflow into Ether ETFs, especially into BlackRock’s iShares Ethereum Trust, is a significant factor for the market. Investors watch these trends closely, as they can signal future price movements. The sensitivity of ETH’s price to these inflows shows how important these financial products are for the cryptocurrency market.

Understanding Spot Ether ETFs

Spot Ether ETFs are different from other types of investment funds. They provide direct exposure to Ether, meaning the funds hold actual Ether rather than derivatives or other financial instruments. This direct exposure is attractive to institutional investors looking for a straightforward way to invest in cryptocurrency.

Eight new spot Ether ETFs were launched on July 23. Unlike these new funds, Grayscale’s ETHE was originally a trust before converting to a spot ETF. This conversion has brought significant changes to how the fund operates and how investors interact with it.

Institutional Investors and Their Role

Institutional investors play a crucial role in the cryptocurrency market. Their large investments can cause significant price movements. The outflows from Grayscale’s Ethereum Trust show that even institutional investors can change their positions quickly. However, the positive inflows into other Ether ETFs indicate that there is still strong interest in Ether among these big players.

The Future of Ether ETFs

The future of Ether ETFs looks promising despite the recent outflows from Grayscale’s fund. The strong inflows into BlackRock’s iShares Ethereum Trust suggest that investors still have confidence in these financial products. As more spot Ether ETFs enter the market, competition among them may increase, potentially leading to better options for investors.

Key Takeaways

Positive Inflows: Despite Grayscale’s outflows, Ether ETFs had a net inflow of $26.7 million on August 1, led by BlackRock’s $89.6 million inflow.
Grayscale’s Outflows: Grayscale’s Ethereum Trust saw outflows of $78 million on August 1, bringing total outflows to over $2 billion since its conversion to a spot ETF.
Expert Opinions: Analysts believe the outflows from Grayscale’s ETHE might slow down soon, which could positively impact ETH’s price.
Impact on Price: The inflows and outflows of Ether ETFs significantly affect ETH’s price, showing the importance of these financial products in the market.
Institutional Investors: These investors play a critical role in the cryptocurrency market, and their actions can lead to major price movements.
Future Outlook: The future of Ether ETFs remains strong with continued investor interest and potential market growth.

What’s Next?

Ethereum ETF flows have turned positive again, with significant inflows into BlackRock’s iShares Ethereum Trust. Despite the large outflows from Grayscale’s Ethereum Trust, the overall market sentiment remains optimistic. Experts believe that the slowed outflows from Grayscale’s ETHE could be a bullish sign for ETH’s price. As institutional investors continue to show interest in Ether ETFs, the future looks promising for these financial products and the broader cryptocurrency market.

Bitcoin

Understanding the Current Crypto Cycle: Insights for 2024

by mei August 2, 2024

written by mei 7 minutes read

Introduction: Where Are We in the Crypto Cycle?

Cryptocurrencies have been a hot topic for a while now. Many people are curious about where we are in the crypto cycle and if the momentum can continue. In this article, we’ll explore factors that influence long-term crypto growth, such as macroeconomic trends, regulatory shifts, and evolving use cases.

Crypto Prices and Market Trends

The prices of major crypto assets like Bitcoin and Ethereum have been moving in a broad range since March 2024. Some believe that the peak for this cycle happened in the first half of 2024. Here are a few reasons why:

Market Entrants: There haven’t been enough new people entering the market. Even with new spot Bitcoin and Ethereum ETFs, long-term holders have been selling.
Policy Easing: The big policy changes that helped the 2020/21 rally were due to the global pandemic, a rare event.
End-User Demand: There’s not enough demand from regular users through consumer applications, especially compared to the large supply of blockspace created by new scaling solutions.

These arguments make some sense but don’t fully consider all the risks for the next one or two years. Although nothing is certain, many factors suggest that crypto can still grow.

Global Monetary Policy and Crypto

Monetary policy, or how central banks manage money supply and interest rates, affects crypto. Over the past two years, developed markets have seen tight monetary policy, with high short-term interest rates. However, things are changing in 2024. For example, the European Central Bank and the Bank of Canada have cut rates, and interest rate markets are showing a more dovish outlook.

Interest Rates and the USD

The US has had higher interest rates compared to other major economies. This has kept the USD strong. But as interest rates may start to drop, the USD could weaken. If this happens, crypto prices might rise against the USD.

Central Bank Policies

Along with high interest rates, many central banks have reduced their balance sheets to fight inflation. This has led to high long-term real interest rates, negatively affecting housing markets. As central banks become more confident that inflation is under control, they might slow down the reduction of their balance sheets. This could lead to lower long-term real interest rates, another positive factor for the crypto cycle.

Asset Prices and Financial Crises

Policymakers have learned that they cannot allow systemically-relevant asset prices like housing, stocks, and bonds to fall unchecked. Falling asset prices can lead to financial crises, as seen in the 2008 crisis. Policymakers will likely ease policies aggressively if asset prices fall too much, which can benefit crypto. Bitcoin, for example, gains value as an asset outside the traditional financial system.

Improving Regulatory Environment

The regulatory environment for crypto in the US is improving. The upcoming US elections could further improve the situation, with prediction markets favoring the Republican party. They support crypto-friendly policies, such as self-custody of digital assets and Bitcoin mining. Even if the predictions are wrong, crypto might not become as partisan an issue as it was in 2022.

Stablecoin Legislation

Stablecoins are also getting attention. The next session of Congress might address stablecoin legislation. Stablecoins, like Tether, have grown significantly, with Tether owning almost $100 billion in US Treasury assets. This demand for US Treasuries from stablecoin issuers helps support the US economy.

Global Regulatory Climate

Beyond the US, other countries are also becoming more crypto-friendly. For instance, Hong Kong’s regulatory climate has become more supportive over the past year. There is also a possibility that China might lift its ban on crypto. If the US declares Bitcoin a strategic asset and supports USD-backed stablecoins, China might follow suit.

Crypto Infrastructure and Applications

Some people worry that the focus on infrastructure development in crypto is hurting the development of popular end-user applications. Recent Ethereum layer-2 launches are an example. Critics say this is fragmenting liquidity and causing a “vibecession” in the community.

Historical Concerns

Concerns about the state of crypto development are not new. In the 2020-2021 bull market, the high cost of blockspace was a major issue. Before that, scalability solutions were heavily criticized. However, these concerns often prove temporary and don’t affect long-term trends.

Future Applications

Despite current worries, the abundance of blockspace today provides a good environment for new applications to emerge. Prediction markets, for example, are becoming more popular as people use them to track outcomes like the US presidential election. This is more useful than traditional opinion polls.

Stablecoins and Growth

Stablecoins are growing rapidly and benefiting from the current scaling infrastructure. The market capitalization of stablecoins is over $160 billion, almost 80 times what it was five years ago. However, this is still a small fraction compared to major economies’ money supply. With more regulatory clarity, stablecoins can take advantage of the available blockspace to support global payment networks.

Cycle Timing Tools and On-Chain Data

Some concerns about the crypto cycle rely on on-chain data and cycle timing tools, especially for Bitcoin. One common metric is the market capitalization to realized capitalization ratio (MVRV). This shows the difference between the last market price and the price at which coins were last bought. However, as Bitcoin’s use cases expand, the relevance of these metrics may decrease.

Bitcoin and Ethereum ETFs

The introduction of ETFs for Bitcoin and Ethereum allows these assets to be used in broader portfolio strategies. This can increase transaction frequency and reduce the effectiveness of on-chain cycle timing metrics.

In summary, while some believe that the crypto cycle might have peaked, many factors suggest continued growth. Macroeconomic trends, regulatory shifts, and evolving use cases all point to a bright future for crypto. As the market continues to develop and adapt, it’s essential to stay informed and consider all aspects influencing the crypto cycle.

News

Coinbase Q2 Revenue Surpasses Estimates Despite Transaction Revenue Drop

by muhammed August 2, 2024

written by muhammed 4 minutes read

Overview of Q2 Results

Coinbase reported its financial results for the second quarter (Q2), showing a total revenue of $1.45 billion. This was higher than the market consensus estimate of $1.396 billion. In the same period last year, Coinbase’s total revenue was $674.1 million. The exchange’s net income for Q2 was $36 million, a significant improvement compared to a net loss of $97 million in 2023. Earnings per share (EPS) for the three months ending June 30 stood at $0.14 per share.

Layer-2 Network Base Adoption

A major highlight of Coinbase’s report was the progress in the adoption of its Layer-2 network, Base. Transactions on Base increased by 300% quarter-over-quarter. Coinbase emphasized that efforts during Q2 significantly improved network efficiency. The median daily fees per transaction on Base dropped below 1 cent, making it one of the cheapest Layer-2 solutions available.

Revenue Breakdown

Despite the positive overall revenue, Coinbase experienced an 11% decline in total revenue quarter-over-quarter. Transaction revenue also fell by 11%, amounting to $781 million during the quarter. However, subscription and services revenue increased by 17%, reaching $599 million. This rise reflects Coinbase’s strategy to diversify its revenue sources beyond transaction fees.

Transaction Revenue

Transaction revenue, which forms a large part of Coinbase’s income, declined by 11% in Q2. This was a significant drop, but Coinbase managed to balance this with increased revenue from other sources.

Subscription and Services Revenue

Subscription and services revenue saw a substantial increase of 17% in Q2. This part of Coinbase’s business is growing as the company tries to rely less on transaction fees and more on steady, recurring income.

Bitcoin’s Role in Trading Volumes

Bitcoin played a significant role in Coinbase’s trading volumes during Q2. It represented 35% of trading volumes and 31% of transaction revenues. However, total trading volumes decreased by 28% quarter-over-quarter. Consumer trading volume dropped by 34%, and institutional trading volume fell by 26%.

Financial Outlook and Future Predictions

Looking ahead, Coinbase expects third-quarter subscription and services revenue to be between $530 million and $600 million. Several factors are influencing the company’s financial outlook:

A 3% decline in the average price of Ethereum in July.
Expectations of a rate cut in September.
Increased expenses related to the adoption of USDC as a compliant stablecoin.
A one-time $8 million blockchain rewards revenue benefit recorded in Q2.

Coinbase also anticipates challenges related to fluctuating crypto prices and additional costs aimed at promoting the global adoption of USDC.

Stock Performance

Coinbase’s shares have risen approximately 20% year-to-date. Following the earnings report, the stock price was up 1.43% in after-hours trading, reaching $216 per share as of press time. This increase reflects investor confidence in Coinbase’s ability to manage its financials and continue growing despite challenges.

Conclusion

Coinbase’s Q2 financial results show a mixed picture. While total revenue and net income beat market estimates, transaction revenue saw a decline. The company is making significant strides in the adoption of its Layer-2 network, Base, and is diversifying its income sources with a notable increase in subscription and services revenue. Bitcoin remains a crucial part of Coinbase’s trading volumes, but overall trading activity has decreased. Looking forward, Coinbase has a cautious yet optimistic outlook, anticipating stable subscription and services revenue despite potential challenges related to crypto price fluctuations and increased expenses.

Coinbase’s Q2 performance demonstrates its resilience and strategic efforts to adapt to the evolving crypto market landscape.

Bitcoin

El Salvador Proposes Cryptocurrency for Trade with Russia and Eyes BRICS Membership

by mei August 1, 2024

written by mei 7 minutes read

El Salvador’s Proposal to Use Cryptocurrency for Trade with Russia

Introduction

El Salvador has proposed a new way to settle trade with Russia: using cryptocurrency. This Central American nation wants to use digital currency instead of traditional financial systems. They are also interested in joining the BRICS bloc and might apply for membership in the next one or two years.

Ukraine-Russia Conflict Echoes in Central America

El Salvador has proposed using cryptocurrency to settle trade with Russia, according to Alexander Ilyukhin, the First Secretary of the Russian Embassy in Nicaragua. This move aims to help El Salvador overcome the challenges of its dollarized economy. El Salvador’s proposal comes amid the ongoing conflict between Russia and Ukraine. Ukrainian leader Volodymyr Zelensky has been urging El Salvador to support Kyiv against Russian forces. However, El Salvador’s government remains neutral and is focused on establishing trade ties with Russia.

Cryptocurrency as an Alternative Payment Method

Alexander Ilyukhin stated that El Salvador has difficulties with financial calculations because their official currency is the US dollar. As an alternative, El Salvador offers to use cryptocurrency for trade operations with Russia. This innovative approach could help both countries bypass traditional financial systems and avoid Western sanctions. The proposal highlights El Salvador’s interest in modernizing its trade practices and adopting digital currency for international trade settlements.

Challenges of a Dollarized Economy

El Salvador’s economy uses the US dollar as its official currency, which poses challenges in international trade. Traditional financial systems often involve complicated processes and can be influenced by external factors like sanctions. By using cryptocurrency, El Salvador aims to simplify these processes and avoid the restrictions that come with using the US dollar. This could make trade with Russia more straightforward and beneficial for both nations.

El Salvador’s Neutral Stance in the Russia-Ukraine Conflict

While the Russia-Ukraine conflict continues, El Salvador has chosen to remain neutral. Ukrainian leader Volodymyr Zelensky has called for El Salvador to support Ukraine, but the Central American nation is more interested in maintaining neutrality and developing trade relations with Russia. This neutral stance allows El Salvador to explore new economic opportunities without getting involved in the geopolitical tensions of the conflict.

Interest in Joining the BRICS Bloc

El Salvador has expressed a desire to join the BRICS bloc, a group of emerging economies that includes Brazil, Russia, India, China, and South Africa. Alexander Ilyukhin revealed that El Salvador might formally apply for BRICS membership within a year or two. Joining the BRICS bloc could help El Salvador attract foreign investment and gain economic independence from the US and the World Bank. The BRICS countries represent a significant portion of the world’s economic power, and membership could provide El Salvador with new opportunities for growth and development.

Attracting Foreign Investment

El Salvador’s interest in joining the BRICS bloc is driven by a desire to attract foreign investment. By becoming part of this group, El Salvador hopes to bring in investment from BRICS countries, which could boost its economy and create new job opportunities. The country is looking to diversify its sources of investment and reduce its reliance on traditional financial institutions like the World Bank.

Overcoming Challenges with Traditional Financial Systems

Traditional financial systems often involve complex processes and can be affected by international sanctions. El Salvador’s proposal to use cryptocurrency for trade with Russia aims to overcome these challenges. By adopting digital currency, El Salvador can streamline its trade operations and avoid the complications associated with using the US dollar. This innovative approach could set a precedent for other countries facing similar challenges in international trade.

Potential Benefits of Cryptocurrency in Trade

Using cryptocurrency for trade settlements offers several potential benefits. First, it can reduce transaction costs by eliminating the need for intermediaries like banks. Second, it provides greater transparency and security, as blockchain technology ensures that all transactions are recorded and cannot be altered. Third, it allows for faster and more efficient cross-border transactions, which can enhance trade relations between countries. For El Salvador, these benefits could translate into a more robust and resilient economy.

Creating a Bank to Handle Trade Settlements

When asked if using the two countries’ respective currencies to settle trades is an option, Alexander Ilyukhin mentioned that creating a bank to handle these transactions is possible. However, this route could expose traders to Western sanctions. By using cryptocurrency, El Salvador and Russia can avoid these sanctions and ensure that their trade relations remain unaffected by external pressures. This approach also aligns with El Salvador’s goal of achieving greater financial independence.

The Role of Cryptocurrency in Modernizing Trade Practices

El Salvador’s proposal to use cryptocurrency for trade with Russia reflects a broader trend of digital transformation in international trade. As more countries explore the use of digital currencies, traditional financial systems may need to adapt to these changes. For El Salvador, adopting cryptocurrency represents an opportunity to modernize its trade practices and position itself as a forward-thinking economy. This move could also encourage other countries to consider similar approaches to enhance their trade operations.

Implications for International Trade Settlements

If El Salvador’s proposal to use cryptocurrency for trade with Russia is successful, it could have significant implications for international trade settlements. Other countries may follow suit, adopting digital currencies to simplify their trade processes and avoid the challenges associated with traditional financial systems. This shift could lead to a more decentralized and efficient global trade system, with cryptocurrency playing a central role in facilitating cross-border transactions.

Economic Independence from the US and the World Bank

By proposing to use cryptocurrency for trade with Russia and seeking membership in the BRICS bloc, El Salvador aims to achieve greater economic independence from the US and the World Bank. This move reflects a broader desire to diversify its economic partnerships and reduce its reliance on traditional financial institutions. For El Salvador, achieving economic independence is crucial for its long-term growth and stability.

Future Prospects for El Salvador

El Salvador’s innovative approach to trade and its interest in joining the BRICS bloc indicate a forward-thinking strategy for its future. By embracing cryptocurrency and seeking new economic partnerships, the country aims to position itself as a leader in digital finance and international trade. These efforts could help El Salvador achieve sustainable economic growth and enhance its global standing.

Conclusion

El Salvador’s proposal to use cryptocurrency for trade with Russia represents a bold step towards modernizing its economy and achieving greater financial independence. By adopting digital currency, the country aims to overcome the challenges of its dollarized economy and simplify international trade processes. Additionally, its interest in joining the BRICS bloc reflects a desire to attract foreign investment and reduce reliance on traditional financial institutions. As El Salvador continues to explore these innovative approaches, it could set a precedent for other countries looking to enhance their trade operations and achieve economic independence.

News

Montenegro To Extradite Do Kwon to South Korea, Rejects U.S. Request

by Tatjana August 1, 2024

written by Tatjana 5 minutes read

Montenegro to Extradite Do Kwon to South Korea

Montenegro has decided to extradite Do Kwon, the co-founder of Terraform Labs, to South Korea. This decision came after the U.S. also requested his extradition, but Montenegro chose to send him to his home country. Do Kwon has been in custody in Montenegro since March 2023 for using a fake passport while trying to travel to Dubai.

Background on Do Kwon and Terraform Labs

Do Kwon is well-known in the cryptocurrency world. He co-founded Terraform Labs, which was behind the Terra/LUNA ecosystem. In May 2022, the Terra/LUNA system collapsed, causing a loss of $40 billion. This was a significant event, leading to the fall of many high-profile crypto companies, including FTX, which was the second-largest crypto exchange globally.

Arrest and Charges

After the collapse of Terra, Do Kwon went on the run. In September 2022, Interpol issued a red notice for him. A red notice is like an international arrest warrant. Six months later, in March 2023, Do Kwon was caught in Montenegro. He was arrested for trying to use a fake Costa Rican passport to fly to Dubai. Initially, he was given a four-month sentence for using false documents. However, he stayed in prison until March of this year. When he was released on bail, his real passport was taken away to prevent him from leaving Montenegro.

Court Rulings and Decisions

The Appellate Court of Montenegro recently confirmed an earlier decision by the High Court of Podgorica to extradite Do Kwon to South Korea. The U.S. also wanted to extradite him, but the court decided in favor of South Korea. This decision ends months of back-and-forth arguments over where he should be sent.

Do Kwon fought against being sent to the U.S. In one instance, when the High Court of Podgorica ruled to send him to South Korea, the Supreme Court of Montenegro stepped in. The top prosecutor argued that the decision was beyond the court’s power, leading to more court rulings overturning previous decisions.

Final Decision and Key Figures

According to the Office of the Supreme State Prosecutor, the final decision on where Do Kwon will be extradited can only be made by Montenegro’s minister of justice. Montenegro’s Prime Minister, Milojko Spajic, is also a personal investor in Terraform Labs, which adds an interesting twist to the situation.

No exact date for Do Kwon’s extradition has been set yet. However, the latest court ruling seems to be a significant step toward resolving the matter.

Implications for the Crypto World

The decision to extradite Do Kwon to South Korea has significant implications for the cryptocurrency world. His arrest and the charges against him highlight the legal challenges that come with the fast-growing and often unregulated crypto industry. The collapse of Terra/LUNA and the subsequent downfall of other crypto companies like FTX have made many investors wary of the risks involved.

Do Kwon’s Legal Troubles

Do Kwon’s legal troubles are far from over. Both South Korea and the U.S. want to try him for criminal charges related to the collapse of the Terra/LUNA ecosystem. These charges could lead to severe penalties if he is found guilty. The legal battle over his extradition is just the beginning of what could be a long and complicated legal process.

Public and Investor Reactions

The public and investors have been closely following Do Kwon’s case. Many people lost a lot of money due to the collapse of Terra/LUNA, and there is a strong desire for justice. The news of his extradition to South Korea has been met with mixed reactions. Some people are relieved that he will face trial, while others are concerned about the legal process and whether justice will be served.

Conclusion

In summary, Montenegro has decided to extradite Do Kwon to South Korea, rejecting the U.S. request. This decision follows months of legal battles and court rulings. Do Kwon, the co-founder of Terraform Labs, faces serious criminal charges related to the $40 billion collapse of the Terra/LUNA ecosystem. The final decision on his extradition will be made by Montenegro’s minister of justice. This case is a significant event in the crypto world, highlighting the legal challenges and risks associated with the industry.

By keeping the language simple and structured with clear headings, this article aims to provide an easy-to-read and informative overview of the situation, making it accessible to readers at a 10th-grade reading level.

Ethereum

Centralized Crypto Exchanges Losing Ground to DeFi in 2024: A Steady Shift in Trading Volume

by muhammed August 1, 2024

written by muhammed 5 minutes read

Centralized Crypto Exchanges Losing Ground to DeFi Counterparts

In 2024, decentralized exchange (DEX) volume has been on the rise. It went from $133.5 billion in January to $179.5 billion this month, showing a 34% increase. Centralized crypto exchanges are losing ground to their decentralized finance (DeFi) counterparts, according to data analysis by experts.

Rise in DEX Trading Volume

Data from DeFiLlama and CoinGecko show that the percentage of crypto trading volume on DEXs has increased. In February, 4.6% of all crypto trading was on DEXs. This month, it’s over 7%, a 52% increase in DEX trading volume.

Kunal Goel, a senior research analyst at Messari, explained why DEX market share is growing. He said the growth of meme coins and long-tail assets is one reason. These assets usually appear on DEXs first and may never get listed on centralized exchanges.

Improved User Experience on DEXs

Goel also mentioned that onchain user experience (UX) has improved. Low fees and high throughput on Solana and Ethereum L2s make DeFi solutions easier to use. This has helped more people switch from centralized exchanges to DEXs.

DeFiLlama data shows that in the past 24 hours, DEX volume accounted for 22% of all trading volume. This percentage represents the dominance of decentralized exchanges over centralized ones.

Steady Increase in DEX Volume

So far in 2024, DEX volume has seen a steady increase. It went from $133.5 billion in January to $179.5 billion this month. The highest volume this year was in March when both centralized exchanges (CEX) and DEXs saw a big increase. CEX volume hit $4.8 trillion, and DEX volume reached $266.89 billion.

Goel noted that Bitcoin hit new all-time highs in March. Trading activity often goes up when prices and sentiment are high. Looking ahead, Goel expects centralized exchanges to move on-chain, changing their business model. He gave examples like Base and BNB Chain.

DeFi Market Cap Trends

TradingView shows a chart of DeFi market cap dominance, which is now at 3.86%. It has fallen from 4.47% on January 1 and had a high of 4.81% on February 25. Goel pointed out that this is unexpected because DEX volumes drive DEX value. It seems contradictory that the market cap dominance is falling while DEX volume is rising.

What is DeFi?

DeFi stands for decentralized finance, which includes financial tools built on blockchain. This includes DEXs, which operate mostly on-chain. The main purpose of DeFi is to allow anyone with internet access to lend, borrow, and bank without going through middlemen.

Similarly, the main purpose of DEXs is to allow anyone with internet access to trade or provide liquidity for interest. DeFi and DEXs are major areas of focus for decentralized application (dapp) development, which has seen significant adoption this year.

Factors Fueling DEX Growth

There are several factors behind the growth of DEXs. One is the rise of meme coins and long-tail assets. These often appear on DEXs first and may never get listed on centralized exchanges. Another factor is the improved onchain UX with low fees and high throughput on platforms like Solana and Ethereum L2s.

Centralized Exchanges Moving On-Chain

Looking to the future, Goel believes centralized exchanges will move on-chain. This means they will adopt some features of DeFi to stay competitive. Examples include Base and BNB Chain. This shift could disrupt their current business models but may be necessary to keep up with the growing popularity of DeFi.

Impact of Bitcoin on Trading Activity

Bitcoin’s price has a big impact on trading activity. When Bitcoin hit new all-time highs in March, both CEX and DEX volumes increased significantly. This shows that trading activity is often linked to price and market sentiment.

DeFi Market Cap Dominance

Despite the increase in DEX volume, DeFi market cap dominance has fallen. It’s currently at 3.86%, down from 4.47% at the start of the year. This drop is surprising because DEX volumes usually drive up DEX value. It suggests there might be other factors affecting the market cap.

Summary

In 2024, DEXs are gaining ground on centralized crypto exchanges. Improved user experience, the rise of meme coins, and long-tail assets are driving this growth. DEX volume has steadily increased this year, and experts believe centralized exchanges will need to move on-chain to stay competitive. While DEX volumes are up, DeFi market cap dominance has fallen, suggesting a complex market dynamic.

Bitcoin

Bitcoin Dominance Hits Three-Year High: Analysts Predict Altcoin Rally

by mei August 1, 2024

written by mei 7 minutes read

Bitcoin is currently dominating the crypto market, even with the recent launch of Ethereum ETFs. Bitcoin’s market share has surpassed 53% of the total crypto market, the highest it has been in three years. This surge in Bitcoin’s dominance is surprising, especially since altcoins usually perform better than Bitcoin during bull markets.

Bitcoin’s Market Position

According to CoinGecko data, Bitcoin’s market cap stands at $1.27 trillion. In comparison, the total crypto market cap is $2.43 trillion. Ethereum, the second-largest cryptocurrency, holds 15.9% of the market, with a market cap of $389 billion. This means Bitcoin is the most dominant force in the crypto market.

Altcoins Struggle

The increase in Bitcoin dominance this year is unusual because altcoins, like Ethereum and Cardano, typically thrive in a bull market environment. Meme coins made a strong comeback during Bitcoin’s surge to all-time highs earlier this year. However, the so-called “wealth effect” was not as thoroughly enjoyed by altcoins in the middle of the pack.

ETF Flows and Market Dynamics

Meltem Demirors, former chief strategy officer at CoinShares, noted that ETF flows are fundamentally altering market dynamics. On Twitter, she wrote that BTC gains no longer cycle into altcoins and the longer tail of crypto assets. This shift in market dynamics has impacted the performance of altcoins.

Tether’s Market Cap Growth

Bitcoin’s dominance continues even as Tether (USDT), the world’s largest stablecoin and the third-largest cryptocurrency after Bitcoin and Ethereum, sees steady growth in its market cap. Stablecoins like Tether are backed by fiat currencies and are excluded from some measures of Bitcoin dominance due to their fundamentally different value models.

Ethereum Spot ETFs and Market Impact

Despite the launch of Ethereum spot ETFs last week, Bitcoin’s dominance remains strong. The launch ironically led to a sell-the-news event and net outflows from the new investment products since going live. This outcome contradicts predictions from K33 Research, which anticipated that ETFs would catalyze growth for Ethereum over the next five months.

Preparing for an Altcoin Rally

Despite the recent underperformance of altcoins, there are signs that they might be ready for a comeback soon. CryptoQuant CEO Ki Young Ju mentioned that whales are preparing for the next altcoin rally. He pointed out that limit buy orders for non-Bitcoin and Ethereum assets are increasing. A chart shared by the executive showed the cumulative buy-sell volume difference has been rising over the past several months.

Buy/Sell Orders and Market Resistance

CryptoQuant explained that the indicator measures the difference between buy and sell orders over a year. A buy/sell order is a pre-set demand to buy or sell a cryptocurrency if it reaches a certain price level, creating levels of resistance and support. If the trend is going up, it means more people are placing buy orders, showing strong interest in buying.

Bitcoin’s Market Cap and Crypto Market Comparison

Bitcoin’s market cap of $1.27 trillion significantly impacts the overall crypto market. With the total crypto market cap at $2.43 trillion, Bitcoin’s dominance highlights its strength. Ethereum, with its market cap of $389 billion, occupies 15.9% of the market, showcasing the disparity between Bitcoin and other cryptocurrencies.

Meme Coins and the Wealth Effect

Meme coins have had a notable impact on the crypto market this year. During Bitcoin’s surge to all-time highs, meme coins like Dogecoin and Shiba Inu saw significant gains. However, the wealth effect, where investors feel wealthier and spend more, was not as impactful for other altcoins like Ethereum and Cardano.

ETF Flows and Their Influence

The introduction of ETFs has changed how money flows within the crypto market. Meltem Demirors highlighted that ETF flows are altering market dynamics. Previously, gains from Bitcoin would often flow into altcoins. However, this is no longer the case, affecting the performance and growth of altcoins.

Tether’s Role in the Market

Tether (USDT) plays a crucial role in the crypto market. As the largest stablecoin, it provides stability due to its backing by fiat currencies. Tether’s growing market cap, even amidst Bitcoin’s dominance, shows the importance of stablecoins in the overall market. They offer a different value model and are excluded from certain measures of Bitcoin dominance.

The Impact of Ethereum Spot ETFs

The launch of Ethereum spot ETFs was expected to boost Ethereum’s market performance. However, the actual outcome was a sell-the-news event, leading to net outflows from the new investment products. This result was contrary to K33 Research’s predictions, which had anticipated growth for Ethereum over the next five months due to the ETFs.

Signs of an Upcoming Altcoin Rally

Despite the challenges faced by altcoins recently, there are positive signs for a potential rally. CryptoQuant CEO Ki Young Ju observed that whales are preparing for an altcoin rally. The increase in limit buy orders for non-Bitcoin and Ethereum assets indicates growing interest and potential for a resurgence in the altcoin market.

Understanding Buy/Sell Orders

Buy and sell orders play a vital role in the crypto market. A buy/sell order is a pre-set demand to buy or sell a cryptocurrency at a specific price level. These orders create levels of resistance and support, influencing market trends. CryptoQuant’s analysis showed that the cumulative buy-sell volume difference has been rising, indicating strong interest in buying.

Market Resistance and Support Levels

Resistance and support levels are critical concepts in trading. Resistance is a price level where selling pressure prevents the price from rising further, while support is a level where buying pressure prevents the price from falling further. The analysis of buy and sell orders helps identify these levels, providing insights into market trends and potential movements.

What’s Next?

Bitcoin’s dominance in the crypto market has reached a three-year high, even with the recent launch of Ethereum ETFs. Despite the stronger performance of Bitcoin, there are signs that altcoins might be poised for a rally soon. The increasing interest in non-Bitcoin and Ethereum assets, as indicated by rising limit buy orders, suggests that the altcoin market could see significant growth in the near future.

Overall, while Bitcoin remains the most dominant force in the crypto market, the dynamics are continuously changing. The impact of ETFs, the role of stablecoins like Tether, and the potential for an altcoin rally all contribute to the evolving landscape of the cryptocurrency market. As investors and analysts continue to monitor these trends, the future of Bitcoin and altcoins will be shaped by these ongoing developments.

Memecoins

Terra Chain Hack: $5 Million Losses and Network Recovery Explained

by Tatjana August 1, 2024

written by Tatjana 7 minutes read

The Hack and Network Halt

The Terra Chain recently faced a major problem when it was hacked, resulting in losses of over $5 million. This hack affected various tokens, including USDC and Astroport tokens. On Wednesday, July 31, the Terra Luna chain had to stop all activities temporarily because of a suspected exploit. The network’s official account on X (formerly known as Twitter) announced that the network would halt at block height 11430400. During this pause, all transactions on the network were stopped while developers and validators worked hard to fix the issue.

Immediate Response and Market Impact

Following the announcement, the Terra team warned users about the upcoming halt of the chain at block height 11430400. They informed users that all transactions would be suspended during this time. The team was concerned about a potential hack on the Terra chain and assured users that they were taking necessary steps to address the problem. They planned to work with validators on Terra (phoenix-1) to apply an emergency patch to fix the suspected exploit.

The Exploit

The attack targeted a weakness in a third-party module known as IBC hooks. This module is used for cross-chain contract interactions and token transfers. The exploit allowed the hacker to drain value from bridged assets, including tokens like USD Coin (USDC) and Astroport. Early estimates suggest that about $5 million worth of tokens might have been compromised.

Impact on Terra Luna Classic (LUNC) Price

After the hack was announced, the price of Terra Luna Classic (LUNC) dropped significantly, falling over 4%. Despite this initial decline, LUNC managed to partially recover. As of the latest update, LUNC’s price had decreased by 2.84%, reaching $0.00008116.

Details of the Exploit

The Terra chain suffered a major security breach due to an unpatched vulnerability. This flaw allowed an attacker to mint tokens that were then Inter-Blockchain Communication (IBC) transferred onto Terra. This issue arose at a critical time, coinciding with important deadlines in the Terraform Labs bankruptcy proceedings.

The Sophisticated Attack

The exploit involved a complex process using a smart contract, IBC hooks, and a timeout mechanism. By leveraging these elements, the attacker gained unauthorized access to significant assets, including 500,000 USDT and 2.7 BTC. The Terra team is actively investigating the breach to pinpoint the exact nature of the exploit and to address the vulnerability.

Sequence of the Attack

The attack followed a sequence where a smart contract was created on the Terra blockchain and called using an IBC transfer that timed out. This timeout resulted in the tokens being redirected to the attacker’s account. Despite the exploiter’s wallet only receiving a maximum of 56 LUNA and 7,800 USDC per transaction, they managed to extract millions of dollars’ worth of assets.

Collaboration with Astroport

The Terra team, along with Astroport, is working diligently to understand the exploit and prevent future incidents. Astroport has pledged to collaborate with other chains and Cosmos builders to assess and implement necessary measures. They promised to provide updates as more information becomes available.

Resumption of Operations

After the hack, the Terra team resumed block production. They announced on X that block production restarted at approximately 4:19 AM UTC. The emergency chain upgrade was now complete, and transactions were processing normally again. Users could resume their activities on the network.

Validator Upgrades

Validators holding over 67% of the voting power on Terra have upgraded their nodes to prevent the exploit from happening again, with more expected to follow suit. However, the team has not yet provided details on the recovery of the stolen funds or their plans for addressing the breach.

Future Security Measures

The Terra team is focusing on improving the security of the network to prevent such incidents from recurring. They are working closely with validators and other stakeholders to ensure that all vulnerabilities are patched and that the network remains secure. The collaboration with Astroport and other Cosmos builders is a key part of their strategy to enhance the security of the Terra chain.

Community Reactions

The Terra community has been actively discussing the hack and its implications on various forums and social media platforms. Many users expressed their concerns about the security of the network and the impact of the hack on their investments. The Terra team has been communicating with the community, providing updates and reassurances that they are taking all necessary steps to resolve the issue.

Lessons Learned

This incident has highlighted the importance of robust security measures and regular audits of blockchain networks. The Terra team has acknowledged that there were weaknesses in their system that were exploited by the attacker. Moving forward, they plan to implement more stringent security protocols and conduct frequent audits to identify and fix any vulnerabilities.

Importance of Cross-Chain Security

The exploit on the Terra chain also emphasizes the need for improved security in cross-chain interactions. The use of IBC hooks for cross-chain contract interactions and token transfers played a significant role in this hack. The Terra team is now working on strengthening these cross-chain mechanisms to prevent similar exploits in the future.

Blockchain Community Support

The broader blockchain community has shown support for Terra during this challenging time. Several projects and developers have offered their assistance and expertise to help Terra recover from the hack. This collaborative spirit is crucial for the continued growth and security of the blockchain ecosystem.

Takeaways

The Terra chain hack has been a significant setback, resulting in $5 million in losses and a temporary network halt. However, the Terra team has taken swift action to address the issue and resume normal operations. By working closely with validators, Astroport, and the broader blockchain community, they aim to prevent future incidents and enhance the security of the network. This incident serves as a reminder of the importance of robust security measures and the need for continuous improvement in the rapidly evolving blockchain space.

Stablecoins

Tether Reports Record $5.2 Billion Profit in First Half of 2024

by muhammed July 31, 2024

written by muhammed 5 minutes read

Tether’s Record Profit in 2024

Tether Holdings Limited, the company behind the largest stablecoin USDT, has reported a record net profit of $5.2 billion for the first half of 2024. This is a significant milestone for Tether, as it continues to demonstrate its financial strengths and strategic investments. In this article, we’ll break down Tether’s impressive financial performance, its strategic investments, and what this means for the future of the company.

Tether’s Impressive Financial Performance

Tether released its latest quarterly attestation, showing a net profit of $5.2 billion for the first half of 2024. This record profit highlights Tether’s strong financial health and its ability to generate revenue from traditional asset-class investments, mainly U.S. Treasuries. The second quarter alone saw a net operating profit of $1.3 billion, driven largely by yield-bearing investments and reserves.

Tether’s Market Capitalization and USDT

Tether issues USDT, the largest stablecoin in the world, with a market capitalization of nearly $115 billion. This significant market cap underscores the trust and reliance on Tether’s stablecoin in the digital token market. USDT is said to be backed 1:1 by U.S. dollars or dollar equivalents, which has been a point of controversy in the past due to the lack of an official audit of its reserves.

Financial Strengths and Investments

Tether’s financial strengths are largely due to its strong revenue base from traditional asset-class investments. The company has invested heavily in U.S. Treasuries, making it one of the top global holders of U.S. debt. In fact, Tether’s U.S. Treasury ownership surpassed $97.6 billion, placing it 18th overall and third in the purchase of 3-month U.S. Treasuries.

Impact of Economic Trends

The post-COVID inflationary environment and subsequent raised interest rates have benefited Tether. The company’s strategic increase in Treasury investments highlights its commitment to maintaining a stable financial position and a strong revenue base. This trajectory suggests that Tether could become the leading holder of U.S. Treasuries in the near future.

Diversified Investments

Tether has been reinvesting its profits in a variety of areas, including decentralized AI, Bitcoin mining, and a peer-to-peer messaging platform called Keet. These investments show Tether’s commitment to innovation and its efforts to diversify its revenue streams. The company’s investments in sustainable energy, data infrastructure, AI infrastructure, P2P telecommunications technology, neurotech, and education further underscore its forward-thinking approach.

Group Equity and Financial Health

Despite a drop in Bitcoin prices resulting in an unrealized loss of $653 million, Tether’s Group Equity increased by $520 million in Q2 2024. This was partially offset by a positive performance in gold investments, which added $165 million in unrealized profit. As of June 30, 2024, Tether’s consolidated net equity stood at an impressive $11.9 billion.

Issuance of USDT

During the second quarter, Tether issued over $8.3 billion in USDT, reinforcing its position as a stable and reliable issuer in the digital token market. The reserves for Tether tokens in circulation amounted to $118.4 billion, against liabilities of $113.1 billion. This shows that Tether’s consolidated assets exceed its liabilities by over $5.3 billion, demonstrating a strong financial position.

Regulatory Scrutiny

In February 2021, the New York Attorney General ordered Tether to post quarterly attestations and pay an $18.5 million settlement for lying about the stablecoin’s backing for several years. Since then, Tether has been committed to transparency and stability. The latest assurance opinion for Q2 2024, conducted by BDO, reaffirms the accuracy of Tether’s Consolidated Financials Figures and Reserves Report (CFFRR).

Statements from Tether’s Management

Paolo Ardoino, CEO of Tether, highlighted the company’s commitment to transparency, stability, and responsible risk management. He emphasized that Tether’s strong financial position allows it to continue investing in diverse areas and maintain its leadership in the stablecoin industry. The company’s management reiterated the strength of its financial position, with consolidated assets exceeding liabilities by a significant margin.

Future Prospects

Looking ahead, Tether’s strategic investments and robust financial health suggest a bright future for the company. The company’s ability to generate significant profits from traditional asset-class investments, particularly U.S. Treasuries, positions it well for continued growth. Additionally, Tether’s commitment to innovation and diversification through investments in decentralized AI, Bitcoin mining, and other areas indicates a forward-thinking approach that will likely benefit the company in the long run.

Tether’s record net profit of $5.2 billion for the first half of 2024 underscores its strong financial health and strategic investments. With a market capitalization of nearly $115 billion, USDT remains the largest stablecoin in the world. Tether’s investments in U.S. Treasuries and diversified areas like decentralized AI and Bitcoin mining highlight its commitment to maintaining a stable financial position and driving innovation. Despite past controversies, Tether’s management is focused on transparency, stability, and responsible risk management. As the company continues to grow and innovate, it is well-positioned for a successful future in the stablecoin industry.

Bitcoin

Sen. Lummis’ BITCOIN Act of 2024: Empowering US States to Hold Bitcoin

by muhammed July 31, 2024

written by muhammed 5 minutes read

Sen. Cynthia Lummis’ Bitcoin Bill

Senator Cynthia Lummis from Wyoming has introduced a new draft bill. This bill, known as the “Boosting Innovation, Technology, and Competitiveness through Optimized Investment Nationwide Act of 2024,” or the “BITCOIN Act of 2024,” could change how the United States handles Bitcoin. The bill would let U.S. states hold Bitcoin in their reserves if they choose to participate.

Details of the BITCOIN Act of 2024

The BITCOIN Act of 2024 aims to allow the United States and individual states to hold Bitcoin as part of their reserves. Bitcoin, as a decentralized and scarce digital asset, offers unique properties that complement existing national reserves like gold and petroleum. This bill could strengthen the position of the U.S. dollar in the global financial system.

Bitcoin Purchase Program

One of the key parts of the bill is the Bitcoin Purchase Program. This program will buy up to 200,000 Bitcoins each year for five years, adding up to a total of 1 million Bitcoins. The U.S. Treasury Department will be responsible for managing this program. They will publish quarterly reports on their website so the public can see how the program is going. States can also participate in storing Bitcoin holdings as part of the reserve if they follow certain security protocols.

Support and Background of Sen. Cynthia Lummis

Sen. Cynthia Lummis has been a strong supporter of Bitcoin for years. On July 27, she announced her plan to introduce this bill. Although she does not expect the bill to become law this year, it could be considered after the elections in November.

Importance of Bitcoin in U.S. Reserves

Lummis believes that establishing a strategic Bitcoin reserve will bolster the U.S. dollar with a digital hard asset, securing the nation’s standing as a global financial leader for years to come. The United States already holds reserves in assets like gold and petroleum, so adding Bitcoin could further strengthen the national reserves.

Adjustments to Gold Certificates

The draft bill also includes changes related to gold certificates. Within six months of the bill’s enactment, Federal Reserve Banks must tender all outstanding gold certificates to the Secretary of the Treasury. Then, within 90 days of receiving the last certificate, the Secretary will issue new gold certificates that reflect the fair market value of the gold held against them. This ensures that the value of gold in the reserves is accurately represented.

Crypto Industry and the 2024 Elections

Cryptocurrency is becoming a significant topic in the lead-up to the 2024 elections. GOP presidential candidate Donald Trump has promised to end what he calls an “unlawful and un-American crackdown” on the U.S. crypto industry. Meanwhile, Vice President Kamala Harris’s campaign team has started asking questions about the cryptocurrency industry. This shows that both parties are paying attention to the growing importance of crypto.

How States Can Participate

States can choose to participate in the Bitcoin reserve program voluntarily. To do so, they must adhere to specific requirements, including stringent security protocols to protect the Bitcoin holdings. This gives states the flexibility to decide whether they want to include Bitcoin in their reserves, based on their own financial strategies and needs.

Impact on the Global Financial System

Including Bitcoin in the U.S. national reserves could have a significant impact on the global financial system. Bitcoin’s unique properties as a decentralized and scarce digital asset could provide additional stability and strength to the U.S. dollar. This move could position the United States as a leader in the adoption of digital assets, influencing other countries to consider similar strategies.

Sen. Cynthia Lummis’ BITCOIN Act of 2024 represents a bold step towards integrating Bitcoin into the U.S. financial system. By allowing states to hold Bitcoin in their reserves and establishing a national Bitcoin reserve, the bill aims to strengthen the U.S. dollar and secure America’s position as a global financial leader. With the growing importance of cryptocurrency in the political landscape, this bill could pave the way for significant changes in how digital assets are viewed and used in national financial strategies.

Overall, the BITCOIN Act of 2024 highlights the potential benefits of Bitcoin as a strategic reserve asset and sets the stage for further discussions and developments in the integration of digital assets into national reserves. As the political and financial landscapes continue to evolve, the role of Bitcoin and other cryptocurrencies in national and global economies will likely become even more prominent.

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