Welcome to the latest edition of our Market Roundup, where we cover the highlights of the past week in the rapidly evolving world of blockchain and decentralized technologies.
(as of 1:30 AM UTC, July 7, 2023)
Crypto trading volumes rose in June for the first time in three months, according to data solutions and market insights provider CCData. This was likely due to a positive outlook brought on by high-profile financial institutions filing for spot Bitcoin exchange-traded funds (ETFs) with the United States Securities and Exchange Commission (SEC) last month.
There are other bullish signals, including a 25% increase in bitcoin open interest since BlackRock filed its bitcoin ETF application, the highest point since March 2022, less than two months before the Terra ecosystem’s crash weighed down the broader crypto market. For two weeks starting around June 19, US$3 billion was poured into the futures market, taking its value to US$14.4 billion, according to crypto derivatives data analysis platform CoinGlass.
Even though the SEC has yet to approve a spot bitcoin ETF, investors hold expectations that the commission will eventually give the green light to some applicants, given intense institutional interest. When viewed along with the upcoming bitcoin halving in April 2024, some traders hold the view that the value of BTC will generally move up.
Meanwhile, the US Federal Reserve said it intends to resume interest rate hikes after a pause in June. If that happens, then this may be one factor that weighs down crypto prices.
For more insights about market movements, be sure to check out the routine updates on BTSE Blog.
Web3 News
- Bitcoin Depot, the world’s largest crypto ATM operator, had a successful debut on the Nasdaq stock market with its shares rising nearly 12%. The company merged with special purpose acquisition company GSR II Meteora (GSRM) in a deal valued at $885 million. Bitcoin Depot, based in Atlanta, Georgia, is the first crypto ATM operator to be listed on a major US stock market. The company operates over 6,000 crypto ATMs, representing a significant market share. CEO Brandon Mintz sees great potential for consolidation in the sector and plans to expand installations with major retailers in addition to Circle K convenience stores.
- A proposed Ethereum ERC standard, the ERC-7265 “Circuit Breaker,” aims to address the high frequency of attacks and losses in the decentralized finance (DeFi) space. The standard, developed by Meir Bank and Philippe Dumonet, introduces a temporary halt on token outflows when a predefined threshold is exceeded. The goal is to reduce the attack surface of protocols and prevent sudden drawdowns resulting from hacks or exploits. While some individual DeFi applications have implemented similar measures, this is the first serious attempt at a standardized circuit breaker. The authors hope that their standard will be adopted by both existing and future DeFi protocols to improve security and protect user funds.
- A recent report by blockchain security firm Beosin reveals that the crypto market suffered losses of over US$656 million in the first half of 2023 due to hacks, scams, and rug pulls. The data shows that there were 108 hacking attacks, resulting in US$471.43 million in lost funds. Additionally, rug pulls and phishing scams accounted for losses of US$75.87 million and US$108 million, respectively. While the losses from hacking incidents in the first half of 2023 were lower compared to the same period in 2022, one case involved an amount exceeding US$100 million. On a positive note, approximately US$215 million, or 45.5% of the stolen assets, have already been recovered, which is a significant improvement compared to the recovery rate in 2022.
- Despite facing regulatory challenges and a perceived crypto winter, blockchain and crypto-asset firms are also grappling with the growing influence of artificial intelligence (AI). Venture capitalists and investors are increasingly shifting their focus and funds toward AI projects, with over US$5 billion invested in AI startups in Q1 2023 alone. However, some view AI and crypto as adversaries, missing the point that these trends are here to stay and will continue to accelerate. While the crypto space faces issues of trust, transparency, and regulatory hurdles, AI can play a crucial role in addressing these challenges. AI tools can enhance transparency through real-time reporting and comparable standards, assist in fraud detection, improve smart contract implementation, and facilitate bot-to-bot payments. The integration of AI and crypto will ultimately contribute to the development of must-have use cases for the industry.
- Thailand has joined Singapore in banning crypto exchanges from offering lending services, prioritizing investor protection in its crypto policy approach. The country’s Securities and Exchange Commission (SEC) announced the ban, which includes depository services that provide returns to depositors and lenders. Additionally, the Thai SEC has implemented mandatory trading risk disclaimers and investor suitability assessments to ensure users understand the potential downsides and set limits on their investments. The new regulations will take effect on July 31, 2023. This move follows Singapore’s similar ban and the Monetary Authority of Singapore’s requirement for exchanges to place customer assets in a trust to prevent mishandling of funds. The bans come in response to the FTX exchange’s collapse last year, which highlighted the need for stricter regulations in the industry.
- According to Anatoly Yakovenko, the founder of Solana, it is possible for Ethereum to function as a Layer 2 (L2) solution for Solana. L2s are bridge protocols that provide one-way security, allowing users to exit from Ethereum to Solana even in the presence of double spending or invalid state transitions on Ethereum. To make this work, several conditions need to be met. First, Ethereum transactions would need to be submitted into the Solana network for accessibility. Second, a Simplicity Payment Verification (SPV) root would need to be submitted to the Ethereum network as proof of Ethereum’s consensus. Finally, a bridge timeout mechanism would be required to identify and resolve faults. While holding Solana assets on Ethereum would be safe, Yakovenko said Ethereum should not be used as a platform for lending or maintaining positions against these assets.
Stories You Might Have Missed
- Pendle Finance, an Ethereum- and Arbitrum-based liquid staking derivatives (LSD) platform, is expanding to the BNB Chain network in an effort to attract new users and generate revenue. Liquid staking has experienced significant growth in the decentralized finance (DeFi) space, and Pendle aims to tap into the potential of LSD-based financial products. The platform offers users tradable digital tokens that provide yields, with certain strategies offering high annualized yields of up to 82% on ether (ETH) and ether derivative tokens. Pendle aims to establish liquidity for LSD in these ecosystems, enabling other protocols to build on top. Despite the market conditions, Pendle’s locked token value has grown nearly 300% since the beginning of the year.
- Hong Kong is making significant strides towards becoming a hub for cryptocurrency and blockchain technology. The government has established the Web3 Development Task Force, a group dedicated to promoting ethical development in the Web3 space. With participation from industry experts and key government officials, including the financial secretary, the task force aims to provide recommendations for the sustainable growth of Web3 in Hong Kong. This move aligns with the government’s efforts to attract virtual asset-related companies to the region, as evidenced by over 80 companies expressing interest in establishing a presence in Hong Kong. The recent invitation extended to global virtual asset trading platforms and the implementation of a new regulatory framework further solidify Hong Kong’s position as a crypto-friendly jurisdiction. The improving regulatory environment has already attracted the attention of major crypto companies, highlighting the potential significance of Hong Kong’s crypto policies in the broader Greater China market.
- Venture capital investments in the cryptocurrency space have experienced a significant decline of over 70% in the past year, according to data from crypto data provider RootData. In June 2022, the industry received US$1.81 billion across 149 funding rounds, while this year saw only US$520 million raised in 83 projects, marking the lowest funded month to date. Although there were occasional months of growth, the overall trend shows a decline in VC interest. The infrastructure category led in funding, with US$213 million invested in 26 projects, followed by centralized finance (CeFi) and games. Ethereum and Polygon (MATIC) were the networks with the most funded projects over the past year, with those in the United States receiving the largest share of funding. Coinbase Ventures emerged as the most active VC in the space. This decline in VC interest may be attributed to various factors, including detrimental actions by companies like FTX and Terraform Labs, banking issues, and regulatory crackdowns in the United States.
- Revolut, a popular financial platform, has announced that it will delist Cardano’s ADA, Polygon’s MATIC, and Solana’s SOL tokens from its platform for US customers. The decision is based on changing laws and regulations surrounding cryptocurrency in the US. Revolut uses Bakkt as its crypto services provider, which previously announced its own plans to delist the tokens. While Revolut will no longer process buy and sell orders for these tokens in the US, there are no plans to delist them in other markets. The delistings come in response to the US Securities and Exchange Commission (SEC) claiming that SOL, MATIC, and ADA are securities. Other platforms like Robinhood and eToro have also ceased support for these tokens following the SEC’s actions.
- The UK financial watchdog, the Financial Conduct Authority (FCA), has issued new rules for crypto advertising, requiring all companies, regardless of their location, to comply with strict regulations starting from October 8. The rules apply to communications about crypto-related products on websites, apps, social media, and online ads. Crypto firms must choose one of four legal paths to market to UK consumers, including obtaining regulator authorization or exemptions. The FCA has set a deadline of August 4 for businesses to respond with their preparations for the new regime. Failure to comply could result in up to two years in jail, “unlimited” fines, or both. Last year, over 50 cryptocurrency firms in the UK were issued enforcement notices for engaging in misleading and socially irresponsible advertising practices.
Our aim is to create a platform that offers users the most enjoyable trading experience. If you have any feedback, please reach out to us at feedback@btse.com or on Twitter @BTSE_Official.
Note: BTSE Blog contents are intended solely to provide varying insights and perspectives. Unless otherwise noted, they do not represent the views of BTSE and should in no way be treated as investment advice. Markets are volatile, and trading brings rewards and risks. Trade with caution.
