CoinDesk Crypto

Bitcoin stalled after approaching the $50,000 resistance level on Monday. The cryptocurrency was trading at about $49,500 at press time and is up about 8% over the past week. Analysts expect a period of consolidation ahead of Friday’s option expiration date and news from the Federal Reserve’s annual economic policy symposium in Jackson Hole, Wyo. 

“The trend is bullish; however, caution is to be exercised at these levels due to the decline in volume as well as resistance from April and May,” Marcus Sotiriou, a trader at GlobalBlock, wrote in an email to CoinDesk.

“$51K would be a natural place for a short-term pause in the rally,” Katie Stockton, managing director of Fairlead Strategies, wrote in a Monday newsletter. 

Related: Cuando China habló, bitcoin reaccionó. ¿Cuando lo hizo Estados Unidos? No tanto

“Long-term momentum behind bitcoin has strengthened and the 200-day (40-week) moving average is rising again, supporting a bullish long-term outlook,” she wrote.

Latest prices

Cryptocurrencies:

• Bitcoin (BTC) $49218, +1.14%
• Ether (ETH) $3303, +4.25%

Traditional markets:

• S&P 500: 4479.5, +0.85%
• Gold: $1803, +0.57%
• 10-year Treasury yield closed at 1.251%, compared with 1.261% on Friday

Several analysts noted that extreme overbought conditions have unwound since April, which is providing support for the crypto rally. 

Related: Tether Starts Printing Again After 2-Month Pause

“Right now, bitcoin and other cryptos have enjoyed technical support (as they were becoming mildly oversold),” Santiago Espinosa, a strategist at MRB Partners, wrote in an email to CoinDesk. “At this juncture, some cryptos can continue to do well if policymakers neglect inflationary pressures and regulatory issues don’t become a mainstream problem.”

Bitcoin options expiry

Roughly 25% of bitcoin options open interest is set to expire on Friday. The largest concentration of open interest is seen at the $50,000 strike price, which is also a key technical resistance level.

“Despite implied volatility softening over the past few weeks, $50K is a large psychological barrier and the open interest concentration could prove choppy going into expiration,” Gregoire Magadini, co-founder and CEO of Genesis Volatility, wrote in a Telegram chat. 

The bitcoin options market is placing a 45% chance of BTC trading above $50,000 by the end of September, according to options data provider, Skew. 

Bloomberg’s McGlone still bullish on bitcoin

Bloomberg Intelligence’s Mike McGlone, who won plaudits last year for being among the most prominent analysts predicting that bitcoin would go to $50,000, sees further upside now that the largest cryptocurrency has returned to the mark following a steep market correction.

“Bitcoin, gold and long bonds are top assets set to outperform” in the second half of 2021, McGlone wrote Monday in a report. “The firstborn crypto may have solved the age-old problem of a global reserve asset that’s easily transportable and transactionable, has 24/7 price discovery, is relatively scarce and is nobody’s liability or project.”

BTC holdings rise

The percentage of bitcoin profitable addresses (BTC value above the cost basis) reached a three-month high, according to Glassnode data. 

“The decline in realized losses of late could indicate that investors have found renewed conviction to hold on, or are potentially taking exits that are closer to their original cost basis, as price recovers towards the $50K range,” Glassnode wrote in a Monday blog post. 

Crypto fund inflows

Crypto funds saw $21 million of net inflows last week as digital-asset markets rallied, pushing the total assets under management (AUM) to $57.3 billion, the highest level since May, a new report shows. 

The latest data reflected a reversal after six consecutive weeks of outflows, according to the report Monday by digital-asset manager CoinShares. 

Funds focused on Solana’s SOL token saw the largest inflow among all digital assets, at $7.1 million last week, the report shows. The token hit an all-time high of $82 on Saturday, according to Messari. 

Investors redeemed $2.8 million from bitcoin-focused funds last week, the seventh consecutive week of outflows, despite the largest cryptocurrency’s price upturn. The run matched the streak of outflows recorded in early 2018, the report noted. That was just before the “crypto winter,” when cryptocurrency prices tanked and failed to return to all-time highs for more than two years.

Altcoin roundup

• Visa buys a CryptoPunk for $150K: Visa has bought CryptoPunk 7610, a female CryptoPunk character for around $150,000, taking a step into non-fungible tokens (NFTs) as it seeks to learn more about the burgeoning market. A collection of nine rare CryptoPunks that were among the first 1,000 minted fetched almost $17 million in an auction at Christie’s in May. Cuy Sheffield, Visa’s head of crypto, said in a blog post that the main purpose behind Visa’s purchase was to learn more about the growing market. “We think NFTs will play an important role in the future of retail, social media, entertainment and commerce,” Sheffield wrote. “To help our clients and partners participate, we need a firsthand understanding of the infrastructure requirements for a global brand to purchase, store and leverage an NFT.”
• Tether starts printing again: Tether, issuer of the world’s largest stablecoin, USDT, has started printing again after a roughly two-month halt that sparked investors’ concerns and speculation. Tether has minted at least 2.3 billion USDT since Aug. 1, pushing the token’s market cap to $65 billion, a Tether representative told CoinDesk via email. Demand for USDT has recently rebounded, according to Tether and industry experts, as crypto market sentiment has turned more positive. It’s possible, however, that the demand for USDT may not be driven by bitcoin but instead by some altcoins, such as solana (SOL) and terra (LUNA), whose trading volumes have surged, according to Noelle Acheson, head of market insights at crypto prime broker Genesis Global Trading, which shares common ownership with CoinDesk. 
• USDC to change reserves: The world’s second-largest stablecoin, USDC, will be 100% backed by cash and short-term U.S. Treasurys by September, according to developer Centre, a consortium of crypto exchange Coinbase and payments technology company Circle. Circle revealed last month that only 61% of tokens were backed by “cash and cash equivalents,” referring to cash and money-market funds. Centre “will ensure that the USDC investments revert back to a more conservative investment profile by the end of September,” Emilie Choi, president and chief operating officer at Coinbase, wrote in a tweet.  
• Poly Network hacker releases private key for remaining looted $141M: The attacker who hacked more than $600 million from the China-based Poly Network platform has released the private key for the remaining $141 million of the stolen cryptocurrency. In a note to the Poly Network team, the attacker or attackers referred to the saga as “one of the most wild adventures in our lives.” Poly Network subsequently tweeted its thanks to the attacker or attackers, posting a link to a transaction on the Ethereum blockchain confirming that the key worked.

Relevant news:

• Another US Bank Joins the Small List Willing to Serve Crypto Companies
• Substack Rolls Out Bitcoin Payments via OpenNode and Lightning Network
• Liquid Exchange Hacker Covers Tracks by Sending $20M to ETH Mixer
• PayPal Brings Crypto Service to UK Customers
• AdvisorShares Files for Bitcoin Futures ETF
• Introducing Crypto for Advisors, a Newsletter for Financial Planners
• Cardano Alonzo Hard Fork: What You Need to Know

Other markets

Most digital assets on CoinDesk 20 ended up higher on Monday. 

Notable winners of 21:00 UTC (4:00 p.m. ET):

cardano (ADA) +12.2%

filecoin (FIL) +4.71%

eos (EOS) +3.71%

Notable losers:

algorand (ALGO) -2.24%

the graph (GRT) -1.39%

Related Stories

• Visa Buys a Punk as Bitcoin Returns to $50K
• El Salvador Will Not Require Bitcoin Acceptance, President Bukele Confirms

The U.S.’ top commodities regulator primarily oversees derivatives markets, rather than spot commodity markets, Dawn Stump, a commissioner at the Commodity Futures Trading Commission’s (CFTC), said Monday.

Stump, who was appointed by then-President Donald Trump in 2018, joined a growing group of regulators debating which federal agency should regulate the booming digital asset market in the United States. 

In her statement, Stump described a “grossly inaccurate oversimplification” that digital assets are either securities or commodities that fall under the jurisdiction of the CFTC. If they are deemed to be securities, they would be regulated by the U.S. Securities and Exchange Commission.

Related: Eurex to Launch Bitcoin ETN Futures to Meet ‘Significant Demand’

Because the CFTC doesn’t regulate commodities themselves – only futures contracts or derivative products like swaps – Stump said it doesn’t matter whether digital assets are classified as securities or commodities, because they wouldn’t fall under the authority of the CFTC unless a futures or derivatives contract was involved. 

Earlier this month, SEC Chairman Gary Gensler said that his agency should regulate a broader segment of the crypto market, including possibly spot market and exchanges that list any cryptocurrencies that fall under securities law. In response, crypto-friendly CFTC Commissioner Brian Quintenz tweeted that the SEC has no authority over “pure commodities or their trading venues” – implying that responsibility belongs to the CFTC.

In her statement Monday, Stump also explained the difference between the CFTC’s regulatory authority, which Stump said doesn’t apply to digital assets, and its broader enforcement authority, which Stump suggested does. Using the CFTC’s case against crypto exchange and derivatives trading platform BitMEX as an example, Stump said the agency has historically used its anti-manipulation and anti-fraud enforcement authority to protect cash commodities.

“Because well-functioning futures contracts (and other derivatives products) rely upon a sound underlying cash market and may reference cash market indexes in their pricing. Thus, the CFTC utilizes this particular enforcement authority to protect the integrity of the derivatives markets that it regulates,” Stump wrote.

Related Stories

• Crypto Booster Brian Quintenz to Step Down as CFTC Commissioner
• Congressmen McHenry, Thompson Call SEC Chair Gensler’s Remarks on Crypto ‘Concerning’
• Biden Administration to Pick Acting Chairman Rostin Behnam to Head CFTC: Report

Tether, issuer of the world’s largest stablecoin, USDT, has started printing again after a roughly two-month halt that sparked investors’ concerns and speculation. 

Tether has minted at least 2.3 billion USDT since Aug. 1, pushing the token’s market cap to $65 billion, a Tether representative told CoinDesk via email. USDT, which is pegged to U.S. dollars, usually trades at $1. 

In June and July, USDT’s market cap stagnated around $62 billion despite small fluctuations. Industry experts attributed the reduced demand to China’s crackdown on crypto, the rise of the competing stablecoin USDC and investor concerns over Tether’s own vulnerability. 

Related: Market Wrap: Bitcoin Stalls Near $50K Ahead of Options Expiration Date

Demand for USDT has recently rebounded, according to Tether and industry experts, as crypto market sentiment has turned increasingly positive. The largest cryptocurrency by market cap, bitcoin, has rebounded from its July low of around $29,600, trading at $49,540 as of press time, up 1.8% over the past 24 hours.

“From a supply/demand perspective, as crypto prices go up, more stablecoins and fiat are needed to buy the assets and expand the total market cap of crypto,” Gary Pike, director of sales and trading at crypto services firm B2C2, told CoinDesk. 

“We are seeing increased trading activity across venues that support Tether tokens,” a Tether representative said. 

It’s possible, however, that the increased demand for USDT recently may not be driven by bitcoin but instead by some altcoins, such as solana (SOL) and terra (LUNA), whose trading volumes surged, according to Noelle Acheson, head of market insights at crypto prime broker Genesis Global Trading. Their main trading pair is USDT. (Genesis is a subsidiary of Digital Currency Group, which also owns CoinDesk.)

Related: USDC to Be Backed 100% by Cash, US Treasurys

The average trading volume of USDT against solana for the first 22 days in August stood at 386.6 million, up from a July average of 123.4 million and a June average of 290.7 million, according to CryptoCompare. The average trading volume of USDT against terra for the first 22 days in August was 320.2 million, up from a July average of 120.5 million and a June average of 98 million. 

“BTC’s price may be up, but trading volumes haven’t changed much,” noted Acheson. 

Others cited Tether’s increased transparency as another reason for the rebounding demand. In its new attestation published on Aug. 9, Tether provided more details than ever before on the composition of its $62.8 billion of reserves, including its long-questioned reserves of commercial paper (CP) and certificates of deposit (CDs). 

Roughly 49% of Tether’s $62.8 billion reserves are invested in commercial paper (CP) – typically short-term corporate debt – and certificates of deposit (CDs), out of which roughly 93% was rated A-2 and above, 5.5% at A-3 and 1.5% below A-3 as of June 30. 

The latest disclosure “could be the reason for the resumption of printing, alongside renewed investor confidence and demand,” Sean Rooney, head of research at crypto asset manager Valkyrie Investments, wrote to CoinDesk in an email. 

But for many, there’s still a lot of fear, uncertainty, and doubt (FUD) surrounding Tether’s reserves.

It will take “multiple years for all of the critics to be convinced,” Pike said. 

Related Stories

• Poly Network Hacker Releases Private Key for Remaining Looted $141M
• Coinbase Says USDC Reserves to Be Held in Cash, Short-Term Treasurys From September

El Salvador President Nayib Bukele confirmed that the use of bitcoin as legal tender will not be mandatory, in a Twitter thread on Monday. 

Echoing El Salvador’s finance minister, Alejandro Zelaya, who said the same thing last week, Bukele said the government would not force any of the nation’s residents to receive bitcoin as a form of payment.

“If someone wants to continue to carry cash, not receive a sign-on bonus, not win over customers who have bitcoin, not grow their business and pay commission on remittances, they can continue to do so,” Bukele wrote. 

Related: Market Wrap: Bitcoin Stalls Near $50K Ahead of Options Expiration Date

Bukele did not refer to Article 7 of the Bitcoin Law, which stipulates that all economic agents must accept bitcoin as a form of payment when offered by the person acquiring goods or services.

Ernesto Sanabria, a spokesman for Bukele, told CoinDesk that “the president has been clear in saying that the use of bitcoin is not mandatory.” 

Asked about a possible change to Article 7, Sanabria said he had already addressed the issue in his response. He did not specify whether the article will be eliminated or otherwise modified. 

On digital wallets to use bitcoin, Bukele said El Salvador residents “will be able to accept payments in bitcoin or in dollars, open a small business and manage it from there, receive money from family or friends and send and receive remittances without paying a single cent of commission to anyone.”

Related: Cuando China habló, bitcoin reaccionó. ¿Cuando lo hizo Estados Unidos? No tanto

“If they want to. If they don’t, just don’t download anything and that’s it,” he wrote.  

If bitcoin is received, it can be converted into U.S. dollars, left in a digital wallet or converted into cash at one of the 200 ATMs that will be available in the country, Bukele said, adding that “there will also be 50 branches to withdraw or deposit money.”

On the use of bitcoin for remittances, Bukele wrote that Salvadorans abroad will be able to send money instantly to family members living in the country. “You can send bitcoin (if you want) or you can send dollars, if you want.” 

“If you don’t want to, you can always go to Western Union and pay a commission. No problem at all,” Bukele said. 

Zelaya said last Tuesday that the use of bitcoin and digital wallets in El Salvador will be “totally optional,” and businesses that do not accept the cryptocurrency will not be penalized. 

Asked whether it was necessary to eliminate Article 7 from the Bitcoin Law, Zelaya asked why and did not expand on the subject. 

Related Stories

• Crypto Funds Snap 6 Weeks of Outflows as Markets Rally
• Substack Rolls Out Bitcoin Payments via OpenNode and Lightning Network

Customers Bank, based in West Reading, Pennsylvania, is joining the small list of FDIC-insured institutions in the U.S. that are willing to work with cryptocurrency businesses. 

The bank will compete against Silvergate in California and Signature in New York in offering crypto firms basic accounts as well as a blockchain-based platform for clients to instantly send each other dollars 24/7. 

“We are well-positioned to be a great third banking option that can offer a strong offering to the digital asset space,” said Cameron Somers, Customers Bank’s head of digital assets. “The main focus is to build a low cost deposit franchise very similar to what Signature Bank and what Silvergate Bank has done.”

Related: BankProv Launches Payments Network for Crypto Customers

Because of onerous anti-money-laundering (AML) and know-your-customer (KYC) requirements, most U.S. banks have been reluctant to work with cryptocurrency firms. The exchanges and other firms that serve the digital asset market, however, process high volumes of payments and typically seek multiple banks to store and move their users’ fiat. 

“Customers continue to try to find ways to be involved, engaged, and interested in the cryptocurrency world,” said Sam Sidhu, Customers Bank’s vice chair and chief operating officer. “Some banks might offer rewards or custody services to consumers. We are focused on the businesses that may directly or indirectly service those customers.”

Tokenized dollars

Ten to 15 clients will begin testing Customers’ blockchain payments platform from a technology provider called Tassat in September before the bank opens the service up to the rest of the crypto ecosystem in October. 

“Once we have a fully functional ecosystem with a number of different types of institutions on that platform then the idea would be to continue to expand from there and then potentially build on some additional products and features within our offering,” Somers said.

Related: Silvergate Took $4.3B in Deposits From Digital Currency Customers in Q2

The Tassat Pay Network provides real-time blockchain payments by tokenizing U.S. dollar deposits and moving them between digital wallets on Tassat’s platform. Conceptually, it is similar to JPMorgan Chase’s JPM coin, which enables the megabank’s corporate customers to send each other money instantaneously using a private blockchain.

Similarly, Tassat’s blockchain can only facilitate payments between clients of the banks using it, though the platform is connected to traditional payments systems like the automated clearing house (ACH) and Fedwire.

The on-chain fiat payments will be free, in contrast to the fees for sending payments via ACH, and Customers Bank said it expects to pay little or no interest on these firms’ deposits. “So they’ll be the raw material for our bank to provide loans,” Sidhu said. 

Customers Bank also plans to offer Tassat Pay to non-crypto clients in accounting, alternative energy, commercial real estate, healthcare, hospitality, insurance and manufacturing, Sidhu said.

Main Street banking

With $19.6 billion in assets, Customers Bank is 0.52% the size of JPMorgan, and regional institutions like this are the sweet spot for Tassat.

The partnership is a first for Tassat outside powering Signature Bank’s Signet. The fintech provider is courting banks with deposits between $5 billion to $200 billion, said Tassat CEO Ron Totaro. (Similarly, digital asset management firm NYDIG is targeting payments and banking tech providers to help smaller banks compete in the crypto space). 

“The nation’s largest banks are experimenting with blockchain to launch new services and attract deposits and customers, often away from small and midsize institutions,” Totaro said. “What they have—that small and midsize institutions don’t—is an expansive budget, teams and ability to experiment. In contrast, small and midsize banks need to see ROI from every cent they spend on technology.” 

Related Stories

• Signature Bank Adds $6.3B in Deposits from Digital Asset Customers
• Signature Bank Taps Tether Rival TrueUSD for Payments Platform

Crypto funds saw $21 million of net inflows last week as digital-asset markets rallied, pushing the total assets under management (AUM) to $57.3 billion, the highest since May, a new report shows. 

The latest data reflected a reversal after six consecutive weeks of outflows, according to the report Monday by digital-asset manager CoinShares. 

Funds focused on Solana’s SOL token saw the largest inflow among all digital assets, at $7.1 million last week, the report shows. The token hit an all-time high of $82 on Saturday, according to Messari. 

Related: Market Wrap: Bitcoin Stalls Near $50K Ahead of Options Expiration Date

Investors redeemed $2.8 million from bitcoin-focused funds last week, the seventh consecutive week of outflows, despite the largest cryptocurrency’s price upturn. The run matched the streak of outflows recorded in early 2018, the report noted. That was just before the “crypto winter,” when cryptocurrency prices tanked and failed to return to all-time highs for more than two years.

Crypto funds focused on ethereum netted $3.2 million of inflows last week.  

Funds focused on Cardano’s ADA token saw net inflows of $6.4 million, while litecoin funds brought in $1.8 million and polkadot funds netted $1.1 million.

Related Stories

• Cuando China habló, bitcoin reaccionó. ¿Cuando lo hizo Estados Unidos? No tanto
• El Salvador Will Not Require Bitcoin Acceptance, President Bukele Confirms
• Substack Rolls Out Bitcoin Payments via OpenNode and Lightning Network

Cardano’s (ADA) price hit a record $2.91 level on Monday, raising anticipation that the broader market rally along with the network upgrade could help it break the $3 level for the first time in its history.

Substack’s over 500,000 paying subscribers will now be able to pay using bitcoin through the Lightning Network, a layered payment network for Bitcoin.

• The announcement was made by OpenNode, a bitcoin payment processor that has integrated its API to allow both on-chain and Lightning payments on the Substack online publishing platform. ​​To start, OpenNode and Substack are making the payment system available to a select group of crypto-focused publications. 
• The Lightning Network is a layer 2 payment rail built on top of the Bitcoin blockchain that enables secure, private and near-instantaneous transactions at little to no cost. 
• Transactions on the Lightning Network use real bitcoin but can process over 3,000,000 times more transactions per second.
• “Having this option will give writers more flexibility and freedom, and we look forward to doing more in crypto to meet writers’ needs,” said Nick Inzucchi, product designer at Substack. 
• “Our partnership will allow content creators across the Substack ecosystem to accept bitcoin payments, and retain earnings in bitcoin or convert to preferred currency. Writers and podcasters have flocked to Substack to regain creative and financial freedom, and bitcoin is a natural fit,” said João Almeida, co-founder and CTO at OpenNode.

Related Stories

• Market Wrap: Bitcoin Stalls Near $50K Ahead of Options Expiration Date
• Cuando China habló, bitcoin reaccionó. ¿Cuando lo hizo Estados Unidos? No tanto
• El Salvador Will Not Require Bitcoin Acceptance, President Bukele Confirms
• Crypto Funds Snap 6 Weeks of Outflows as Markets Rally

FTX.US, the U.S. affiliate of crypto exchange FTX, has signed a $17.5 million, 10-year agreement with Cal Athletics, the athletic department of the University of California, Berkeley, for the naming rights to the field at California Memorial Stadium.

• The field will be known as the “FTX Field” at the California Memorial Stadium and is FTX.US’ first college-related cryptocurrency naming rights sponsorship. The Berkeley campus is the flagship campus of the University of California system.
• Cal Athletics’ multimedia rights holder Learfield will accept the payment in cryptocurrency on behalf of the university. 
• FTX has been on a sports and e-sports sponsorship spending spree this year. In March, the exchange secured the naming rights to the home arena of NBA team Miami Heat for a reported $135 million, while in June, the exchange paid $210 million to acquire the naming rights for e-sports organization TSM.
• The latest deal involves FTX featuring its branding on press backdrops and launching a platform with Cal Athletics to support philanthropic projects. 
• FTX has a connection to Cal Athletics through Chief Operating Officer Sina Nader, who is a Cal alumnus and was a walk-on member of the football team. “We’re excited to partner with one of the world’s great universities  and expand crypto’s presence into the collegiate athletics landscape,” Nader said in a press release.

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• FTX Market Share in Bitcoin Futures Nearly Doubled Since June

 

CoinDesk is launching a new newsletter – one that’s different from our existing titles in an important way. It’s called Crypto for Advisors, and we’re building it specifically for financial advisors (FAs) and registered investment advisors (RIAs). The newsletter will do what CoinDesk is best at – informing and educating a highly engaged audience – only this time the audience is financial professionals who are new to crypto, curious about it and looking for ways to incorporate it into their work.

Why a newsletter for this audience, and why now? Read on.

Financial security is inherently a long game. We all want it, but few of us are sophisticated enough about markets and assets to take that security into our own hands. That’s why the financial advisor industry exists.

Related: Cuando China habló, bitcoin reaccionó. ¿Cuando lo hizo Estados Unidos? No tanto

Similarly, the world of crypto is a mystery to many. That’s not surprising: The intricacies of cryptocurrencies and the markets built around them can be profoundly different from traditional assets. That learning curve keeps many people out of the market.

Still, the rapid expansion of crypto as an asset class has fueled a lot of curiosity. A recent survey by Gemini revealed 63% of U.S. adults consider themselves “crypto curious,” meaning they want to learn more or are planning to buy crypto soon.

In a normal world, those people would turn to financial advisors to help them navigate the subject. But while some FAs and RIAs have stepped up and studied crypto markets to figure out their place in the portfolios of people looking for long-term success, many others have taken a more absolute approach to the crypto industry and avoid it altogether. While that’s certainly the safest approach, it also cuts them – and their clients – out of this interesting and growing asset class.

Such a conservative approach is often the result of a lack of knowledge and resources – and that’s where our new newsletter comes in. Every week, Crypto for Advisors will speak directly to the FA community, informing and educating FAs about how crypto can fit into their lives as well as unpacking the most recent developments in crypto and finance for investors curious about this asset class.

Related: Crypto News Roundup for Aug. 23, 2021

Why us? For starters, CoinDesk is home to the best reporting about crypto and crypto markets on the planet, and has been for the better part of a decade. From that foundation, we’ve tapped into our community, in particular the people who helped us create Bitcoin for Advisors to help create this newsletter. You’ll see authors from the advisor world, journalists who cover the industry and writers who specialize in explaining the complex landscape of crypto to financially sophisticated audiences.

The rapidly expanding crypto market is attracting the attention of the world, and many investors are anxious to turn their curiosity into action. To help them find their way in this new – and volatile – territory, they need financial advisors who can continually build their understanding of digital assets. And Crypto for Advisors is designed to do just that. Subscribe here.

Related Stories

• Coinbase Says USDC Reserves to Be Held in Cash, Short-Term Treasurys From September
• Crypto Long & Short: When China Spoke, Bitcoin Reacted. America? Not So Much

With the valuation of bitcoin picking up once again, adoption of the Lightning Network, a second layer protocol built on the Bitcoin blockchain and a radical solution to Bitcoin’s scaling limitations, is surging as well.

Stablecoin USDC will be 100% backed by cash and short-term U.S. Treasurys by September, developer Circle announced.

• Circle revealed last month that only 61% of tokens were backed by “cash and cash equivalents,” referring to cash and money-market funds.
• The September attestation published by Circle will show that all USDC reserves are held in cash and short-term U.S. government Treasurys, the company announced Sunday.
• Circle revealed plans in July to go public via special purpose acquisition corporation (SPAC) Concord Acquisition Corp. in a deal that would value Circle at $4.5 billion.
• Earlier this month, Circle announced its desire to become “a full-reserve national commercial bank” operating under the supervision of the U.S. Federal Reserve, U.S. Treasury Dept., Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corp. (FDIC).

Related Stories

• Market Wrap: Bitcoin Stalls Near $50K Ahead of Options Expiration Date
• Tether Starts Printing Again After 2-Month Pause
• Coinbase Says USDC Reserves to Be Held in Cash, Short-Term Treasurys From September
• Why Is the Fed so Scared of Stablecoins?

Bitcoin (BTC) buyers were active over the weekend and defended support near the 200-day moving average at $45,000. The cryptocurrency was trading around $50,000 at press time and is will likely face resistance towards $55,000.

The short-squeeze rally has lasted for about a month as bitcoin held $30,000 support and broke out of a consolidation phase above $42,000. BTC is up about 46% over the past 30 days despite recent signs of upside exhaustion.

• The relative strength index (RSI) is near overbought levels on the daily chart, which could encourage profit taking around resistance.
• Pullbacks should be brief given initial support near $45,000.
• Upside momentum is strengthening on daily and weekly charts, which suggests buyers are in control.

Related Stories

• Bitcoin on Longest Weekly Winning Run in 9 Months Ahead of Jackson Hole Symposium
• Bitcoin Tops $50K for First Time in 3 Months
• Crypto Long & Short: When China Spoke, Bitcoin Reacted. America? Not So Much
• Market Wrap: Bitcoin Rallies Ahead of $50K Resistance

Visa has bought a female CryptoPunk for around $150,000, taking a step into the non-fungible token (NFT) market.

• Visa bought CryptoPunk 7610 on Aug. 19, the payments technology company announced Monday.
• CryptoPunks, of which 10,000 have been minted, are considered to be the original NFTs. CryptoPunk 7610 is one of 3,840 “female” punks.
• A collection of nine rare CryptoPunks that were among the first 1,000 minted fetched almost $17 million in an auction at Christie’s in May this year.

UPDATE (AUG 23, 11:41 UTC): Adds first NFT purchase to headline.

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Cardano’s Alonzo update brings the network much closer to its full capabilities.

The Alonzo hard fork is a major upgrade on the Cardano network that sees the much-anticipated implementation of smart contract functionality. Smart contracts are pieces of computer code that automatically execute when certain predefined conditions are met. After the Alonzo update, anyone will be able to create and deploy their own smart contracts on the Cardano blockchain, paving the way for native decentralized applications (dapps).

The system update, which is expected to roll out fully sometime in the third quarter, signifies the end of the Shelley era of Cardano and the beginning of the Goguen phase. Although there is no set date for the end of the Alonzo hard fork, developers all across the network have been working hard on testnets and have stuck to a defined road map with specific milestones in the form of “eras.”

The eras of Cardano

Related: Market Wrap: Bitcoin Rallies Ahead of $50K Resistance

Cardano’s development road map is divided into six main stages, or “eras,” each focused on expanding the functionality of the network.

• Byron – Sets up the foundation code of Cardano. Allows users to exchange the ADA currency, named after revolutionary programmer Ada Lovelace, and mine ADA with their proof-of-stake consensus algorithm
• Shelley – Focuses on decentralizing the network by setting up incentives for users to host their own nodes. The main goal of this era is to make sure the nodes, or individual computers, are run by a diverse group of network participants rather than a small, centralized group of users
• Goguen – Introduces smart contract capabilities to the network allowing developers to create decentralized applications on top of Cardano
• Basho – Improves the underlying performance of the Cardano network to be able to process more transactions and scale up. This era also introduces side chains, which is a means of scaling a network using multiple blockchains
• Voltaire – Adds a voting and treasury system for self-sustaining governance. Users will be able to stake their funds to influence future development on the network

Cardano is now in the final stages of the Shelley era. This development phase added a host of new features to Cardano such as a proof-of-stake protocol known as Ouroboros, an incentives and delegation scheme that rewards participants and better hard wallet support.

By offering rewards to those who run full nodes – network participants who download the entirety of the Cardano blockchain – Cardano incentivizes network participation and encourages the growth of the Cardano network.

Since its launch on July 29, 2020, Shelley has introduced two major hard forks: Allegra and Mary. Allegra introduced a token locking mechanism that allows users to lock up Cardano tokens in preparation for on-chain voting (which is expected to roll out in Voltaire, the final development stage). Mary, on the other hand, introduced token support for Cardano’s Native Tokens (CNT). These native tokens are similar to Ethereum’s ERC token standards and enable users to create and deploy their own tokens on the Cardano blockchain, including non-fungible tokens (NFTs).

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Cardano operates using its own “hard fork combinator” – a system that combines two different protocols (such as Byron and Shelley) onto a single ledger to ensure a smooth transition between phases. One problem that Cardano developers saw with hard forks was that after a hard fork was agreed upon, there would still be a considerable segment of the community that did not switch over to the new version. That may have been because they disagreed with changes or just because they didn’t bother upgrading. Either way, the combinator allows nodes to run multiple versions at once, meaning transitions are seamless and updates are frictionless. Essentially, rather than be opt-in, the updates will be opt-out.

Alonzo stages

The Alonzo hard fork is split into three main color-coded phases.

• Alonzo Blue
• Alonzo White
• Alonzo Purple

There are also two smaller phases post-Alonzo Purple dubbed “Alonzo Red” and “Alonzo Black.” Each phase essentially adds more users to the testnet and identifies bugs that may need to be fixed.

Alonzo Blue introduced smart contracts with around 50 technical participants, mostly stake pool operators (SPOs). Invalidation errors and other simple fixes were found and tweaked during this phase. These standard bugs are expected to appear and be fixed as Alonzo goes through testing.

Alonzo White adds more features and a wider range of participants to Alonzo Blue. The hundreds of new users will be run through a sort of “exercise boot camp” that will test the capabilities of the network. This experiment is being done by IOG; the main development company behind Cardano led by former Ethereum co-founder Charles Hoskinson. The company expects this phase to last around two to four weeks.

Alonzo Purple will become a fully public testnet and on-board thousands of participants to the network. This particular stage is split into two distinct phases, “light purple” and “dark purple.” The first will allow for simple smart contracts, while the latter will allow for more complex smart contracts.

Then comes the final Alonzo Red/Alonzo Black color phases, which are reserved for final bug fixes/cleanup to prepare the final release of the hard fork. Any future tweaks to the hard fork will be very difficult to make past this point, and so it is important that these two phases are looked at very carefully.

Staging adds quality assurance, as code is frozen and exchanges are prepped for the Cardano hard fork. Alonzo Mainnet will officially launch the final code.

The Goguen Era, named after famed computer scientist Joseph Goguen, will allow for the development of dapps on the Cardano network for the first time due to Alonzo’s new smart contract capabilities. Smart contracts are the vital components of dapps that enable them to operate without intermediary entities. A smart contract building platform called The Plutus Platform is scheduled to be released during this phase and will allow both technical and non-technical users to build dapps.

What is Plutus?

Plutus uses the native Cardano programming language, Haskell. Plutus and Haskell use the same code base for off- and on-chain development. This means that at the core, the coding is identical so that there will be no complications with programming languages when developing smart contracts. That allows Plutus contracts to become even more straightforward and permits testing, which will allow developers to perfect their products for much more intensive loads such as hosting large institutions or governments.

Hoskinson, who’s now the CEO of IOG, explained Haskell was chosen because it is a high- assurance code (capable of providing a higher degree of certainty the code works as intended).

Many times in the blockchain sector, code doesn’t fully match the intent of the developer and as a result, millions of dollars can be stolen or apps can break down, such as what happened when a Solidity smart contract wasn’t fully fledged out. As a result, the decentralized autonomous organization (DAO) project suffered a significant hack. 

With Haskell, intent can better match the code as the language, although complex, was designed to be precise.

Plutus Core

Then there’s Plutus Core, which is the programming language that connects smart contracts to the Cardano final settlement layer: the Cardano blockchain. Once a developer is done creating their code with Plutus, it is compiled into Plutus Core where the code is simplified for the Cardano blockchain. This method allows Cardano to better deal with the data and to take up less disc space on the actual blockchain.

For the less-technical enthusiasts, there’s Marlowe, a new domain-specific language (DSL) that allows any user to create and test their own smart contracts without needing any advanced programming capabilities. Marlowe is built on top of Haskell and Plutus but can be thought of as building blocks for creating smart contracts.

With easier smart contract production and more development on Cardano, one can imagine the potential projects to be built. If you look at Ethereum, you can see hundreds of projects that can be redeployed, reiterated on and even improved upon on the Cardano network, including Uniswap, Aave and many more. Projects that demand faster transaction speeds will benefit greatly from the low transaction costs on Cardano. Already, more than 65 projects are pledged to be released alongside Alonzo, including Synthesis, Miniswap, Stasis and CardWallet.

The emergence of easier dapp building will bring with it more projects. In his Africa Vision video, Hoskinson mentioned these projects will eventually compete with many real-world financial institutions and aim to replace them with fairer systems, granting economic freedom to those in need.

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Investing in crypto is not protected by Chinese law, the high court of Shandong province said in a ruling yesterday on a contract dispute case that dates back to 2017. The ruling contradicts one from a Shanghai court last week.

• The case could set a legal precedent for crypto trading in the country, an activity that is already under intense pressure.
• Other courts in China have taken a different stance, ruling that digital assets are protected as virtual property or commodities.
• A court in more financially liberalized Shanghai said last week that crypto is protected as virtual property, and China’s Supreme Court last year called for increased protections for virtual currencies.
• In the Shandong case, the plaintiff, identified as Ma, entrusted the three defendants with 70,000 yuan ($10,500 at the time) to invest in tokens in 2017. Soon after, Chinese authorities banned crypto trading using the yuan, and Ma’s money was locked in the trading account.
• The Shandong high court said that notices from the People’s Bank of China, as well as the securities, banking, cyberspace, and other regulators had clearly said at the time that investing in crypto tokens is illegal. Under China’s civil law, the plaintiff was breaching the law, and thus couldn’t get his money back from the defendants.
• Echoing lower court rulings, the Shandong court said that crypto is not a legal currency issued by an authorized monetary authority, so it doesn’t have the legal status of other currencies.

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The attacker who hacked more than $600 million out of Poly Network has released the private key for the remaining $141 million of looted cryptocurrency.

• In a note to the Poly Network team, the attacker referred to the saga as “one of the most wild adventures in our lives.”
• The note was posted to Twitter by Chinese reporter Colin Wu.
• Poly Network subsequently tweeted its thanks to the attacker, posting a link to an Ethereum transaction confirming that the key worked.
• The majority of the funds stolen in the Aug. 10 attack had already been recovered, but the attacker last week threatened to delay publishing the private key for the remainder.
• In the note to Poly Network, the attacker described his reasoning behind the delay citing desire to “unlock the USDT.”
• USDT developer Tether had taken the active step of freezing $33 million worth of the stablecoin that was looted in the attack.
• “In my selfish view, the story is tainted by the locked USDT. It would have been a perfect example of building trust between anonymous ‘adversaries’ by leveraging the power of smart contract.”
• The hack is considered the largest of its kind ever in decentralized finance (DeFi), highlighting the risks for investors and traders in the space.

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Crypto exchange Upbit was the first to register with South Korea’s Financial Intelligence Unit before a September deadline, the FIU website posted on Friday.

• Doh Gyu-sang, vice chairman of the Financial Services Commission, expects another one or two exchanges will register before the end of August, local media reported Friday.
• Authorities have threatened to block the websites of unregistered exchanges that fail to meet the Sept. 24 deadline.
• Registration has several requirements, including setting up partnerships with banks to obtain accounts for real-name verification.
• While other exchanges are reportedly having difficulty persuading banks to work with them, Upbit, South Korea’s largest exchange, already has a partnership with online-first K-bank for real-name verification.
• Bithumb, Coinone, and Korbit also have such partnerships, so they likely will be the next ones to register.
• Foreign exchanges are also under the microscope. The FIU has called on them to register as well if they provide services to S. Korean consumers.
• Binance limited its exposure to Seoul on Aug. 13, when it stopped offering trading pairs and payment options with the South Korean won.
• Last week, Upbit’s local operator Dunamu rolled out a solution for compliance with the intergovernmental Financial Action Task Force’s “travel rule” in Singapore.
• The FIU will review Upbit’s filing within three months, local media reported.

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More than three quarters – 76% – of executives globally think digital assets will be a “strong alternative to or replacement for” fiat in the next five to 10 years, Deloitte’s 2021 Global Blockchain Survey found.

• Even more, 78%, of respondents said that digital assets will be important to their industry in the coming 24 months.
• The survey of 1,280 senior executives and practitioners was conducted March 24-April 10. One third of respondents were based in the U.S., with the rest in Brazil, China, Germany, Hong Kong, Japan, Singapore, South Africa, the UAE, and the U.K.
• The most commonly identified barriers to adoption were cybersecurity, regulation, and financial infrastructure, according to the survey. Data security and privacy regulation must change to enable blockchain adoption, said 68% of survey participants.
• Respondents that had already deployed blockchain and/or digital assets in their core business, or “pioneers” as Deloitte labeled them, more commonly identified regulation, privacy, and cybersecurity as barriers to acceptance.
• Among those, 70% said that digital assets’ greatest impact will be access to funding sources. The next most common answer was “compliance and transparency.”
• Protection against data collection from big tech and other private firms was the most commonly identified potential benefit of central bank digital currencies among respondents.

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