CoinDesk Crypto

Coinbase President and COO Emilie Choi said in a tweet that the crypto exchange’s earlier language, that every USDC is “backed by a dollar in a bank account,” could have been clearer.

• Coinbase “should have moved faster” to update such statements on its website when Circle shared its May report on USDC reserves in late July, Choi wrote. “That was a mistake and Coinbase takes ownership for that.”
• Choi also wrote that “USDC has always been fully backed by reserves equal to or greater than the USDC in circulation, giving users the ability to always redeem 1 USD Coin for US$1.00.”
• Changes in the investment portfolio for USDC reserves began in May 2021 and will not extend past September, Choi wrote.

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Bitcoin is once again trading above the $50,000 price tag, hitting the mark for the first time in over three months.

The world’s largest cryptocurrency by market value is up 2.5% over a 24-hour period and is currently changing hands for around $50,050, its highest point since May 15. Bitcoin’s year-to-date returns now stand at 71.4%, CoinDesk data shows.

“It’s not the first time we’ve crossed this legendary milestone, but given the advancements in the industry lately, $50,000 certainly seems justified at this time,” said Mati Greenspan, CEO of Quantum Economics.

Related: Bitcoin on Longest Weekly Winning Run in 9 Months Ahead of Jackson Hole Symposium

Daily trading volume remains relatively flat and has continued to decline from days prior, though price action remains above a key indicator used to gauge the momentum of a given trend.

“The market continues to hover over the 200-day moving average with bulls still in play,” Toby Chapple, head of trading at digital asset firm Zerocap, told CoinDesk via Telegram. “Relative outperformance by cardano, ether, polkadot, uniswap and others have provided a supporting bid for BTCUSD in recent days.”

Bitcoin is flashing signs of medium-term pricing in the form of long interest from investors, though the futures pricing is certainly not what it was compared to earlier this year, Chapple added.

Larger global issues, including the upcoming U.S. Federal Reserve’s Jackson Hole symposium at the end of August and a Federal Open Market Committee meeting in September, may cause the market to consider any possible moves on global liquidity, Chapple said.

Related: Bitcoin Approaches Resistance Near $50K-$55K

“Any move by the Fed would be negative for price action and involve possible contagion from a risk-off event in traditional markets.”

Other cryptos in the top 20 by market capitalization also rallied on bitcoin’s move with cardano, litecoin, and uniswap clocking the highest gains between 2%-12%.

Lyllah Ledesma contributed to reporting.

Related Stories

• Crypto Long & Short: When China Spoke, Bitcoin Reacted. America? Not So Much
• Market Wrap: Bitcoin Rallies Ahead of $50K Resistance

Bitcoin is once again trading above the $50,000 price tag, hitting the mark for the first time in over three months.

The world’s largest cryptocurrency by market value is up 2.5% over a 24-hour period and is currently changing hands for around $50,050, its highest point since May 15. Bitcoin’s year-to-date returns now stand at 71.4%, CoinDesk data shows.

“It’s not the first time we’ve crossed this legendary milestone, but given the advancements in the industry lately, $50,000 certainly seems justified at this time,” said Mati Greenspan, CEO of Quantum Economics.

Related: Crypto Long & Short: When China Spoke, Bitcoin Reacted. America? Not So Much

Daily trading volume remains relatively flat and has continued to decline from days prior, though price action remains above a key indicator used to gauge the momentum of a given trend.

“The market continues to hover over the 200-day moving average with bulls still in play,” Toby Chapple, head of trading at digital asset firm Zerocap, told CoinDesk via Telegram. “Relative outperformance by cardano, ether, polkadot, uniswap and others have provided a supporting bid for BTCUSD in recent days.”

Bitocin is flashing signs of medium-term pricing in the form of long interest from investors. Though the futures pricing is certainly not what it was compared to earlier this year, Chapple added.

Larger global issues including the upcoming U.S. Federal Reserve meetings at the end of August and a Federal Open Market Committee meeting in September may cause the market to consider any possible moves on global liquidity, Chapple said.

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

“Any move by the Fed would be negative for price action and involve possible contagion from a risk-off event in traditional markets.”

Other cryptos in the top 20 by market capitalization also rallied on bitcoin’s move with cardano, litecoin, and uniswap clocking the highest gains between 2%-12%.

Lyllah Ledesma contributed to reporting.

Related Stories

• Bitcoin Breaks $48K for First Time Since May
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Binance has hired Richard Teng, the former CEO of Abu Dhabi’s financial watchdog, to head the exchange’s operations in Singapore, the company said in a press release on Monday.

• Teng had reportedly been in talks with the exchange’s Singapore subsidiary business to join as early as last week, CoinDesk reported.
• The move can be viewed as an opportunity to get ahead of the regulatory curve which has been a cause of consternation for the exchange in recent weeks.
• Binance Singapore offers Singapore citizens and residents trading pairs for bitcoin, ether and binance coin. The platform provides SGD deposit and withdrawal functionality via Xfers Direct, according to a press release on Monday.
• Teng spent six years at the Financial Services Regulatory Authority at Abu Dhabi Global Market as its head.
• He also spent seven years as the chief regulatory officer of the Singapore exchange and 13 years with the Money Authority of Singapore, according to his Linkedin profile.

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XREX Inc., a Taiwanese blockchain TradeTech firm, has closed a $17 million funding round led by investment firm CDIB Capital Group (CCG) and several big-name investors.

The pre-Series A round was oversubscribed by 200%, according to a press release shared with CoinDesk on Monday. Asked why XREX decided to run its round as a pre-Series A, Wayne Huang, co-founder and CEO of XREX, told CoinDesk on Sunday they felt they hadn’t raised enough revenue.

“Originally we were targeting only $5 million to $8 million, which would give us enough of a buffer to cushion any COVID-caused uncertainty and to have enough revenue to do a Series A,” said Huang. “But traction continued to grow, and investors were very supportive, so we became oversubscribed and decided to increase the round size.”

Related: A16z Leads $4.6M Investment in Yield Guild Games

A pre-Series A funding round allows companies to gauge investor interest in the interim between the seed funding round and the Series A. Funding will go towards expanding the firm’s fiat currency portfolio, acquiring additional licenses and furthering partnerships with financial institutions and digital wallet providers.

Other investors included SBI Holdings subsidiary SBI Investment, Global Founders Capital, ThreeD Capital, E.Sun Venture Capital Systex Corporation, Metaplanet Holdings, AppWorks, Black Marble, New Economy Ventures and Seraph Group.

XREX is a blockchain “TradeTech” company that aims to assist merchants in emerging economies “accelerate” international transactions by providing software-as-a-service, according to its webpage.

The company has developed software solutions such as its BitCheck and MyXchange attempting to assist merchants and SMEs in emerging markets reduce foreign exchange loss and gain access to U.S. dollars.

Related: Cross-Chain Protocol Chainflip Raises $6M to Fund Growth, Security Audits

“Some investors have been eyeing emerging markets as the next global growth hubs and are eager to partner up with companies that are well-versed in the local financial markets,” said Huang, adding:

“Although they have portfolios that leverage blockchain to facilitate inter-bank, cross-border settlement, there’s been very few fintech companies that provide solutions for emerging market SMEs.”

Meanwhile, CCG, formerly China Development Corporation, was the first private development-oriented financial institution in Taiwan and currently manages $2.3 billion with over 250 portfolio companies.

“CDIB was an early investor in XREX,” said Ryan Kuo, head of CDIB Capital Innovation Fund. “After witnessing the company’s fast revenue growth and their commitment to compliance, we were determined to double our investment and lead this strategic round.”

XREX closed its $7 million seed round in 2019 led by AppWorks with participation from late Skype co-founder Toivo Annus, Metaplanet Holdings, Black Marble, CCG and others.

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PayPal is extending its crypto service to the U.K., allowing customers to buy, sell and hold four different cryptocurrencies on its platform.

• Users will be able transact in bitcoin, ether, litecoin and bitcoin cash for as little as £1 ($1.40), PayPal said.
• The rollout is the first expansion of PayPal’s crypto offering outside the U.S.
• The process will begin this week and should be available to all eligible customers within the next few weeks.
• Customers must have verified their identity in order to be eligible. PayPal business accounts will not be supported.
• PayPal introduced crypto buying, selling and holding to U.S. customers last October, a move closely followed by bitcoin attaining new highs for 2020 and one of the sparks that ignited the subsequent crypto bull market.
• The company has not yet allowed users to move crypto holdings off-platform, though this stance may change. Jose Fernandez da Ponte, vice president of blockchain, crypto and digital currencies, said at Consensus 2021 in May that a withdrawal function is in the works.

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Whoever hacked the Japanese crypto exchange Liquid for an estimated $90 million has been taking steps to cover their tracks, according to public blockchain data.

However, two exchanges told CoinDesk they froze funds deposited from addresses believed to belong to the thieves.

Liquid disclosed the breach Thursday in a tweet, pointing at several wallets that it said hackers used to siphon out bitcoin, ether, multiple ERC20 tokens, TRON and XRP. 

Related: Liquid Exchange Attack: Can a Crypto Wallet Ever Be 100% Safe From Hacks?

Later, Liquid tweeted more crypto addresses it identified as the hacker’s, said it halted crypto withdrawals and filed a suspicious transaction report with the Monetary Authority of Singapore (MAS), the country’s financial regulator. On Saturday, Liquid said it updated the exchange’s wallet infrastructure and had been migrating users’ funds “to the new secure vaults.”

The hack is one of the largest of a crypto exchange in recent history, although smaller than the $146 million hack of Italian exchange BitGrail in 2020 and the more than $500 million hack of Tokyo-based Coincheck in 2018.

Since blockchain data is public, everyone from sophisticated analytics vendors who contract for law enforcement to curiosity-seekers and autodidacts can trace the movement of the crypto – up to a point. 

According to a CoinDesk review of the Etherscan block explorer, a little over 6,000 ETH (or about $19.7 million) stolen from Liquid has been sent to Tornado.cash, a non-custodial mixer for ether and ERC20 tokens that allows users to obfuscate their transactions by commingling their crypto with the coins of others. 

Related: Japan’s Liquid Global Exchange Hacked; $90M in Crypto Siphoned Off

From there, the trail goes cold.

Blockchain analysis to a certain extent relies on assumptions about the relationships of addresses to each other and to people in the real world. So on-chain data alone does not provide definitive answers as to who sent money to whom. However, combined with off-chain, real-world information, it can produce valuable insights about the ways crypto works.

Deposited at DEXs….

Etherscan also shows that the hacker used Uniswap, a decentralized exchange (DEX), and other DEXs to liquidate ERC20 tokens, which run on top of the Ethereum network, over the past two days.

Some 9,319 ETH, or $30 million worth of crypto, is still sitting in the hacker’s wallet, according to Etherscan. 

Elliptic released similar findings in a blog post Thursday. Over $97 million in crypto has been sent to the presumed thief’s wallets, the blockchain research firm wrote.

“This includes $45 million in Ethereum tokens, which are currently being converted into ether using decentralised exchanges (DEXs) such as Uniswap and SushiSwap,” Elliptic said. 

According to Liquid’s Friday blog post, various issuers of ERC20 tokens have now frozen those stolen assets. Overall, 69 assets have been stolen from the exchange’s wallets “and sent to other exchanges or defi swapping venues,” Liquid said.

Another ETH wallet controlled by the hacker, identified by Liquid in another tweet, hasn’t liquidated any funds yet and contains over 538 ETH worth $1.7 million.

The bitcoin stolen from Liquid also remains in the hacker’s wallets and hasn’t moved to any exchange yet: According to data from Blockchain.com, all the 107.4 BTC ($4.8 million worth) sent to the address cited by Liquid is still there.

…and CEXs 

A portion of the stolen TRON tokens worth about $1 million was sent in large batches to an address belonging to the centralized crypto exchange (CEX) Huobi, according to the Tronscan blockchain explorer. The funds reached Huobi in several hops via four interconnected wallets.

Mark Lee, a spokesperson for Huobi, confirmed to CoinDesk that the address was indeed a Huobi user’s deposit address.

“After Huobi was alerted of this incident, we quickly placed restrictions on the account, and are currently in the internal process of investigating both the transaction and the account.” Lee added.

Another portion of the stolen TRON, about 3.5 million TRX (or $321,000), didn’t go to Huobi but ended up in a separate wallet.

As for the XRP tokens, the wallet identified by Liquid as the hacker’s sent 11.5 million XRP, about $14.5 million worth, to centralized exchanges Binance, Huobi and Poloniex, according to data from XRPScan. 

Some of those XRP had been successfully swapped for bitcoin on one of the exchanges, Liquid tweeted, and the hacker also managed to withdraw the bitcoin to two addresses (link 1, 2), which now together hold some 192 BTC.

That exchange, it turned out, was Binance: spokesperson Jessica Jung confirmed to CoinDesk that Binance identified the XRP stolen from Liquid in its wallets. “We provided Liquid with relevant information, including the BTC withdrawal addresses,” Jung said. Binance has frozen “associated accounts,” she said.

KuCoin’s CEO Johnny Lyu tweeted on Thursday that his crypto exchange has blacklisted the addresses Liquid pointed at as related to the hack.

CoinDesk also reached out to Poloniex for comment. We will update this story if the exchange responds.

UPDATE (Aug. 21, 15:30 UTC): Adds detail about bitcoin wallet in 16th paragraph.
UPDATE (Aug. 21, 17:19 UTC): Clarifies that it’s one of the largest hacks of a crypto exchange in recent history.

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AdvisorShares, an investment management firm that offers a range of themed ETFs, has submitted an application to the Securities and Exchange Commission (SEC) for a bitcoin futures exchange traded fund (ETF).

• The AdvisorShares Managed Bitcoin ETF will invest “all or substantially all of its assets in exchange-traded futures contracts on bitcoin” and collateral, according to the filing.
• The Bethesda, Md.-based investment management firm said in the filing that it will not invest directly in bitcoin.
• Morgan Creek Capital will serve as the Fund’s sub-adviser, using its research and other resources to help guide the Fund’s investment strategies.
• In remarks earlier this month, SEC chair Gary Gensler suggested he would look more favorably upon bitcoin ETFs that only trade bitcoin futures contracts.
• Investment firms VanEck and ProShares both withdrew their applications with the SEC for approval of ether futures ETFs, just two days after filing them, according to Bloomberg analyst Eric Balchunas on Friday.
• There are over a dozen bitcoin ETF applications currently before the SEC, which has yet to approve one.

Related Stories

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Neuberger Berman’s $164 million commodities fund can invest up to 5% of its assets in bitcoin futures and funds, the asset manager said Friday, following up the crypto play that it began last week.

• “Effective immediately,” Neuberger Berman Commodity Strategy Fund may invest in bitcoin futures and Canada’s bitcoin exchange traded funds (ETF), the regulatory filing said.
• The fund got an initial go-ahead to chase bitcoin and ether exposure through derivative products on August 11. Ether now appears to be off the table; Friday’s bitcoin-only filing said it “replaces” the original.
• While certain ETFs are now on the fund’s whitelist, it still cannot invest directly in digital assets – likely due to regulatory concerns.
• The new filing indicates that Neuberger Berman – a $400 billion asset manager – is seriously eyeing crypto investments if not already participating in its greenlit products.

Read more: Neuberger Berman Greenlights Indirect Crypto Investments for Commodities Fund

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Sentinel Network said in a tweet Friday that 40 million of its DVPN coins were stolen from users through a vulnerability on the HitBTC bitcoin exchange.

• The decentralized peer-to-peer (P2P) bandwidth marketplace, which supports the Sentinel dVPN application, said that the theft resulted from HitBTC exposing its mnemonic phrase, a group of words that are designed to help recover a digital wallet or cryptocurrency.
• “This is completely out of our control, HitBTC had delayed the distribution of funds to users and compromised their own mnemonic,” Sentinel wrote in its tweet.
• In a comment to CoinDesk, Sentinel’s Srinivas Baride, called the exposure “gross negligence” and said that he hoped HitBTC refunds their users and reassesses their management of user funds.”
• HitBTC did not respond to CoinDesk’s request for comment.
• Sentinel Network allows anyone to be able to sell their bandwidth on its marketplace. Developers can use the Sentinel Protocol, built with Cosmos SDK, to build applications, both public and private, that use the Sentinel Network’s bandwidth marketplace for dVPN applications.

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• Crypto Exchanges Pause Services Over Contract Bugs

Crypto exchange Binance suspended the trading of futures contracts on its Brazilian platform on Friday to comply with local regulations. 

Brazilian customers can still trade futures, options, margin products and leveraged tokens, as long as they access the products through the English site, but Binance has stopped marketing its derivatives products, the exchange confirmed through an external spokesperson.

The news was first reported by Brazilian crypto media outlet Portal do Bitcoin.

Related: Binance Tightens Customer Verification Requirements

“To respect the Brazilian order, Binance implemented restrictions on our website and stopped marketing on the derivatives products. If there are new changes, we will evaluate and proactively engage with the relevant stakeholders to find the optimal solutions for the local users. We will share more information if and when we have a decision and are ready to announce,” Binance told CoinDesk.

Brazil’s National Securities Commission (CVM) had asked Binance to suspend futures in July 2020, because the exchange was operating with no authorization, Brazilian crypto media site Livecoins reported. 

Binance has tightened its know-your-customer requirements worldwide after regulators in a number of different countries announced investigations into the company.

More regulations ahead 

Brazil is moving to regulate cryptocurrencies more closely. At an online event held on Thursday, Brazilian Central Bank President Roberto Campos Neto said that the central bank and CVM are discussing the regulation of cryptocurrencies. 

Related: Binance.US Taps Joshua Sroge to Be Interim CEO

During the event, which was promoted by the Council of the Americas, Campos Neto said that in emerging markets bitcoin and ethereum are more explored as investments than as payments, while he emphasized the growth in interest in stablecoins.

“It is important to report that this arises from a need that people have for payments to be fast, open, secure and with transparency in all senses,” he said. 

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Cryptocurrencies are ending the week on a strong note as bitcoin broke above $48,000 for the first time since May. The world’s largest cryptocurrency is up about 4% over the past 24 hours and could face resistance near $50,000-$55,000 heading into the weekend.

On Thursday, Coinbase announced that it will purchase more than $500 million in cryptocurrencies to add to its holdings. The crypto exchange’s CEO, Brian Armstrong, also tweeted that Coinbase will invest 10% “of all profit going forward in crypto.”

The Coinbase announcement encouraged bitcoin buyers to return at the $45,000 support level. Bitcoin’s price jump also coincided with stabilization in equity markets after a pullback earlier this week. 

Latest prices

Related: Bitcoin Breaks $48K for First Time Since May

Cryptocurrencies:

• Bitcoin (BTC) $48,634, +4.1%
• Ether (ETH) $3,248. +4.2%

Traditional markets:

• S&P 500: 4441.7, +0.81%
• Gold: $1782.5, +0.2%
• 10-year Treasury yield closed at 1.259%, compared with 1.245% on Thursday.

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

“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. 

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

“At this juncture, some cryptos can continue to do well if policymakers neglect inflationary pressures and regulatory issues don’t become a mainstream problem,” Espinosa wrote. 

Bitcoin correlations

Bitcoin’s negative correlation with gold intensified over the past few months as inflation expectations eased. Gold is down roughly 6% year to date, compared with a 65% gain in bitcoin over the same period. 

The correlation between bitcoin and the iShares long-duration Treasury bond exchange-traded fund (TLT) briefly turned positive in July as the crypto selloff stabilized. Lately, bitcoin’s relief rally has coincided with a pickup in the 10-year Treasury bond yield, which stalled near the 1.40% resistance level. 

Growing futures volume

The growth in bitcoin futures volume relative to spot volume could reflect greater participation from sophisticated traders. “Over the last year, futures and perpetual swaps have become the most popular financial instruments in crypto,” tweeted Delphi Digital. Futures and perpetual futures account for over 60% of total daily bitcoin volume. 

Perpetuals are gaining ground relative to spot market activity and are quickly becoming the prime source of price discovery, according to Delphi. 

Bitcoin perpetual swaps are a  type of derivative in cryptocurrency markets similar to futures contracts in traditional markets.

Delphi also noticed a similar trend in ether, although spot markets still play a larger role than futures markets with that crypto.

Miner positioning

The bitcoin miners’ positioning index (MPI) has flattened over the past two weeks. The MPI tracks whether miners are shifting their BTC positions higher or lower.

The sideways movement in MPI suggests that “profit-taking by miners is clearly slowing along with the stagnation of the price increase,” CryptoQuant wrote in a Friday blog post.

CryptoQuant expects a downward price adjustment in BTC before a decisive move above the $50,000 price level. A breakout in price could encourage miners to build positions. 

Altcoin roundup

• Cardano hits all-time high: Cardano (ADA), the native cryptocurrency powering the Cardano public blockchain, has hit a fresh all-time high and has surpassed Binance’s native token in total market capitalization, CoinDesk’s Sebastian Sinclair reports. It would appear the Alonzo upgrade is having a significant impact on investor sentiment. The upgrade seeks to usher in smart-contract functionality and address what critics have described as one of the network’s most glaring deficiencies.
• Solana’s Luna Yield goes dark: Decentralized finance protocol Luna Yield has gone offline. Luna’s website and all of its social media accounts have been taken down, according to SolPad, an initial digital offering (IDO) platform for the Solana blockchain. Some are attributing the move offline to a rug pull. A rug pull occurs when the creators of a project take off with investors’ funds. While no official confirmation has been given, the move would mark the first rug pull of its kind on Solana. An anonymous source told CoinDesk over $6.7 million in assets had been taken. The amount has been verified by CoinDesk via the SOL scan block explorer. 
• OKEx establishes $10 million fund for GameFi projects: Crypto exchange OKEx said it is launching a $10 million fund to help develop GameFi, or “play-to-earn,” projects. The cash will come from the exchange’s $100 million OKEx BlockDream Ventures fund, which invests in blockchain projects, the company said. GameFi introduces financial mechanisms into video games, allowing users to make money by playing.

Relevant news:

• Coinbase to Add Over $500M in Crypto to Current Holdings
• VanEck, ProShares Abruptly Withdraw Ether Futures ETF Proposals
• Argo Blockchain Files for Nasdaq Share Listing
• NFT-Focused Topps Abandons Plan to Go Public in SPAC Merger
• BlackRock Has Almost $400M Invested in Bitcoin Mining Stocks: Report
• Liquid Exchange Attack: Can a Crypto Wallet Ever Be 100% Safe From Hacks?
• Binance Tightens Customer Verification Requirements

Other markets

All digital assets on CoinDesk 20 ended up higher on Friday. 

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

polygon (MATIC) +7.63% 

the Graph (GRT) +7.42%

algorand (ALGO) +7.27%

Related Stories

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Dan Tapiero’s 10T Holdings and Akuna Capital have invested $100 million in bitcoin futures exchange Deribit, according to a source with knowledge of the deal.

Deribit, one of the world’s biggest crypto options exchanges by volume, confirmed the transaction occurred but declined to state its current valuation. It said 10T and Akuna purchased equity on the secondary market, meaning that no new shares were issued.

The last time a Deribit share transfer made waves, the Panamanian company was said to command a valuation in the hundreds of millions of dollars. That was in January 2020; options contracts trading on Deribit has since doubled. 

Related: BitMEX, Deribit Tap Shyft Network for FATF ‘Travel Rule’ Solution

The purchase represents a sizable play by Tapiero’s crypto equity fund, which launched in February with $200 million to bet on late-stage companies in the industry. Akuna is also an investor in crypto startups, having participated in multiple funding rounds for crypto lender BlockFi.

“We are thrilled to make a significant investment in Deribit as no business in the digital asset ecosystem is as dominant in its sphere as Deribit is in theirs,” Tapiero, a noted macro investor, said in a press statement. 

Deribit facilitates the vast majority of global bitcoin options trades, according to Coinbase-owned data platform Skew. It reported $8 billion in bitcoin open interest on Thursday.

In a news release, Deribit said it has grown in tandem with this year’s rocketing institutional interest in crypto. Akuna CEO John Harris said there’s a “tremendous opportunity” to expand that footprint further.

Related: Delta Exchange to Simplify Bitcoin Options Trading With Automated Product

“We still have a lot of growth in front of us,” Deribit CEO John Jansen said. 

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Investment firms VanEck and ProShares have both withdrawn their applications with the SEC for approval of ether futures ETFs, just two days after filing them, according to an analyst.

• VanEck filed on Wednesday for an Ethereum-based exchange-traded-fund that would invest in ether futures contracts, Canada’s already-approved ether ETFs, private ether funds and exchange-traded products with exposure to ether. 
• ProShares also filed on Wednesday for approval for an ETF based on ether futures called the ProShares Ether Strategy ETF.
• Senior ETF Analyst for Bloomberg Eric Balchunas speculated that the abrupt withdrawals could mean that the SEC spoke to both firms and told them they were unlikely to approve an ETF futures fund. 

• There are over a dozen bitcoin ETF applications currently before the SEC. 
• In remarks earlier this month, SEC chair Gary Gensler suggested he would look more favorably upon bitcoin ETFs that only trade bitcoin futures contracts. 

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Two more individuals involved in the alleged Bitconnect Ponzi scheme, Joshua Jeppesen and Michael Noble, and a relief defendant, Laura Mascola, must collectively pay more than $3.5 million and hand over 190 bitcoins after the U.S. Securities and Exchange Commission (SEC) obtained judgments against them. 

The SEC said that Jeppesen acted as a liaison between Bitconnect’s leadership and promoters and appeared at conferences and promotional events to represent Bitconnect. He must pay over $3 million in disgorgement and prejudgment interest. He must also pay a $150,000 penalty and hand over a bitcoin wallet to “satisfy his obligation” to pay back 190 bitcoins.

Bitconnect, which operated between January 2017 and January 2018, allegedly used a network of promoters to sell $2 billion worth of unregistered securities. Promoters received commissions, similar to multilevel marketing contractors, for recruiting investors. 

Related: DeFi Not Immune to SEC Oversight, Gensler Says: Report

According to the SEC, Noble, who also went by the name “Michael Crypto,” promoted Bitconnect and sold unregistered securities as part of its fraudulent “lending program.” The judgment against Noble is not final yet, and the disgorgement he must pay will be determined at a later date. 

Both Noble and Jeppesen are permanently barred from offering, operating or participating in certain marketing and sales programs as well as digital asset securities offerings.

The SEC identified Mascola as Jeppesen’s fiancee. The agency said that Mascola, who was not otherwise involved with Bitconnect, received upward of $500,000 in ill-gotten cash and bitcoin from Jeppesen. Mascola’s judgment orders her to pay $576,358 in disgorgement and prejudgment interest.

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After reporting $1.6 billion in net profit in the June quarter, the major U.S. cryptocurrency exchange Coinbase Global looks more confident in its future growth strategies, including global expansion.

The world’s largest cryptocurrency is up 6% over the last 24 hours and has broken the $48,000 mark for the first time since May. At press time, bitcoin was trading at $48,748 according to CoinDesk 20 data.

The recent price rally is not indicative of a massive jump just yet, according to Konstantin Anissimov, Executive Director at crypto exchance, CEX.IO. However, he said that if more buyers dive in to push the price above the $50,000 level, a frenzy could be ushered in to steer the price toward a target of $55,000.

“The next major resistance, for now, is at the $50,000 zone,” said Anissimov.

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

The cryptocurrency is now posting a 66% year-to-date return, CoinDesk data shows.

“The institutional world is turning cautious on stocks and that is making cryptocurrencies look very attractive,” said Edward Moya, senior market analyst at Oanda. Wall Street doesn’t seem to be worrying about a taper tantrum next week, which is helping the cryptocurrency break out, according to Moya.

“If bullish momentum remains in place and next week, Fed Chair Powell pours cold water over tapering asset purchases, bitcoin could rally towards $52,500 by the end of next week,” he added.

The second largest cryptocurrency by market cap, Ethereum, is also posting gains. Up 7% in the last 24 hours, ether was trading at $3,274 at press time.

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Las principales empresas de minería de bitcoin y los fabricantes de equipos mineros están aumentando sus inversiones en la minería de ethereum a pesar del inminente cambio de la segunda red a proof-of-stake (POS, por las siglas en inglés de prueba de participación).

Las empresas públicas de minería de bitcoin Hut 8 y Hive están aumentando sus capacidades para minar la segunda mayor criptomoneda por capitalización de mercado. Mientras tanto, fabricantes de equipamiento de minería, como Bitmain e Innosilicon, están preparados para lanzar nuevas máquinas de minería de ethereum a finales de este año.    

Esta inversión puede parecer extraña, dado que se prevé que el sistema de Ethereum migre de proof-of-work (POW) —sistema de prueba de trabajo, en español— a POS en cinco meses, y debido a que la minería POS no requiere máquinas tan avanzadas. El aumento de la demanda podría atribuirse a las expectativas de que la migración se retrase, según profesionales del sector. 

Related: Market Wrap: Bitcoin Expected to Hold Support Above $45K

Read this article in English.

“Nos dijeron que la minería iba a terminar hace cuatro años y todavía sigue”, dijo Mark D’Aria, director general de Bitpro, una empresa de consultoría con sede en Nueva York centrada en la intermediación y la gestión del hardware de minería de Ethereum. “Siempre ha sido una cuestión de esperar y ver: las cosas tienden a tardar más de lo que todo el mundo espera”.  

Mientras que el fork de Londres de comienzos de agosto lleva a la red un paso más cerca de Ethereum 2.0, las actualizaciones significativas a lo largo de los seis años de historia de Ethereum han tenido un historial de múltiples retrasos.

Por ejemplo, la actualización de Constantinopla —un paso clave hacia Ethereum 2.0— estaba originalmente programada para lanzarse ya en julio de 2018; sin embargo, un error en su código retrasó su despliegue hasta febrero de 2019, generando más tardanzas para la migración. 

Congelación de la minería

Related: Ethereum 2.0 Staking Contract Now Holds the Most Ether: $21.3B

La Propuesta de Mejora de Ethereum (EIP, por sus siglas en inglés) 3554 introdujo algo conocido como la “bomba de dificultad”, que añade mineros artificiales para aumentar la complejidad de la minería y provoca que estas operaciones sean menos rentables. Este periodo se ha denominado la “Edad de Hielo”. Los desarrolladores de Ethereum presentaron inicialmente esta EIP en 2015, pero se ha pospuesto hasta diciembre de 2021. 

A medida que el precio del ether aumenta, puede ser más difícil la transición de la red a proof-of-stake, dijo Ethan Vera, director de operaciones de la empresa minera Luxor, con sede en Seattle.

“Hemos visto que el ether sube hasta los $3.000, las finanzas descentralizadas (DeFi) se construyen sobre la red y [los tokens no fungibles] han despegado”, dijo Vera. “Incluso aquellos que son optimistas en la transición de Ethereum a POS todavía quieren ir despacio para asegurarse de que las cosas se estén haciendo correctamente y no haya ninguna duda potencial, trampas o puntos ciegos que los desarrolladores están pasando por alto.”  

Además de los retos técnicos y los problemas de seguridad de los activos en Ethereum, la posible resistencia de la comunidad minera de esta red podría ser otro factor que ralentice la migración a POS. 

“Algo que no se ha valorado realmente es cuánta resistencia va a haber ante esa migración a proof-of-stake”, dijo D’Aria. “Pensar que simplemente van a pulsar un interruptor y apagar miles de millones de dólares de mineros es una locura; eso no va a suceder”. 

Actores institucionales

La minería de Ethereum tiene más individuos y menos mineros a gran escala que la de bitcoin. 

El consumo de energía relativamente bajo en comparación con los mineros de bitcoin, combinado con las pequeñas cantidades de calor y ruido de los equipos de minería de ethereum, hace posible minar ETH en unidades de procesamiento gráfico (GPU) en casa, dijo Vera. 

Más del 90% de las máquinas de minería de ethereum se basan en GPU, que también es un hardware común utilizado por gamers, dijo D’Aria. 

Sin embargo, los pesos pesados de la minería de criptomonedas se están moviendo para irrumpir en el sector y obtener mayores beneficios que con la minería de bitcoin. 

La empresa pública de minería de criptomonedas Hive Blockchain afirmó que se ha convertido en el mayor minero público de Ethereum del mundo con 3.383 gigahashes por segundo (GH/s), lo que suponía el 1,3% del hashrate total de la red Ethereum en ese momento, según un informe financiero de Hive del 15 de octubre de 2020.   

La empresa con sede en Vancouver tiene como objetivo aumentar su hashrate de minería de Ethereum a 5.500 GH/s, lo que significaría un aumento de 62,5% en comparación con ese nivel para finales de este año. Hive adquirió en febrero un centro de datos de 50 megavatios (MW) en Canadá a One, un proveedor de servicios de colocación de centros de datos GPU.

Otra empresa pública de minería de criptomonedas, Hut 8, compró en mayo equipamiento minero especializado en Ethereum por $30 millones al fabricante de GPU Nvidia. La compañía dijo que se espera que todo eso sea entregado e instalado en sus instalaciones de Alberta a finales de agosto. Tiene previsto lograr un hashrate de 1.600 GH/s con un uso de energía de 4MW. 

“Esta transacción sirve para fortalecer el objetivo de Hut 8 de aumentar la diversificación de los ingresos y para impulsar los objetivos inmediatos de crecimiento de los ingresos a corto y largo plazo en el año fiscal 2021”, dijo la compañía. 

A diferencia de las empresas de minería de bitcoin como Marathon y Riot, las empresas como Hut 8 tienen un mandato de utilizar la energía varada o infrautilizada y convertirla en potencia de cálculo y recompensa, según Vera. 

“Creo que las empresas que están entrando en la minería de Ethereum ahora mismo, a estas alturas del juego, están mirando un panorama más amplio de cómo pueden capitalizar su poder informático”, dijo Vera, quien agregó: “Cripto es un vertical de los muchos que perseguirían”. 

Pagos más rápidos

Están llegando al mercado mineros de ethereum más potentes, que acortan el periodo de recuperación de la inversión en esas operaciones y aumentan los retornos. 

Los mineros especializados en Ethereum, también llamados circuitos integrados de aplicación específica (ASIC, por sus siglás en inglés), son diseñados por fabricantes de mineros como Bitmain específicamente para la minería, mientras que la mayoría de los equipamientos de minería de GPU se fabrican reutilizando tarjetas gráficas originalmente usadas para juegos. 

Nvidia presentó su primer equipamiento minero de ethereum a principios de 2021, mientras que Bitmain e Innosilicon tienen previsto entregar su último modelo para minar ethereum a finales de este año. 

El fabricante de equipos mineros iPollo ha logrado más de $200 millones en ingresos por pedidos anticipados de su último modelo de ASIC para ethereum, el cual se entregará en el cuarto trimestre de 2021, dijo Paul Yao, vicepresidente del departamento de desarrollo de negocios globales en la compañía. Su objetivo es aumentar su producción cuando la empresa alcance una mayor capacidad y pueda fabricar equipos durante todo el año en 2022, según Yao. 

La empresa, con sede en Singapur, establecerá una oficina en Estados Unidos el año que viene y cambiará su enfoque del mercado chino al norteamericano. “Estamos viendo una demanda creciente en esa zona y en algunos de los mercados asiáticos”, dijo Yao. 

“Con un ROI (retorno de la inversión) de ASIC/GPU de cinco a seis meses, y siendo muy probable que ETH 2.0 esté a más de seis meses de distancia, puedo entender que la mayoría acepte el riesgo, especialmente con los precios que parecen fuertes”, dijo Azam Roslan, asociado de ventas senior en Wattum, una empresa de corretaje y gestión de equipos mineros de criptomonedas con sede en Nueva York. 

Vera estimó que el periodo de recuperación de la inversión en minería de Ethereum podría ser tan corto como cuatro meses si los mineros utilizan la última generación de ASICs. “En el caso de la minería de bitcoin, dependiendo del precio que se pague por las operaciones, las empresas públicas están considerando un plazo de un año para la recuperación de la inversión”, estimó Vera. 

En comparación, algunas de las tarjetas GPU existentes para la minería de ethereum, como la tarjeta GPU 3070 producida por Nvidia, todavía necesitan unos 18 meses para que los mineros cubran todos sus costos, dijo Arseni Grusha, director general de Wattum. 

“Se quiere que el periodo de amortización sea inferior a 12 meses, lo que significa que o bien el valor de ETH sube, o bien los precios de las GPU tienen que bajar”, dijo Grusha, quien agregó: “No se espera que los precios de las GPU bajen. Incluso si ETH llega a los $4.000, tendría que mantenerse ahí para que el ROI de la minería de ETH fuera atractivo”. 

Márgenes de ganancias

Un fuerte precio de mercado y unos costos operativos relativamente bajos son algunas de las principales razones por las que la minería de Ethereum ha estado generando más beneficios que la de bitcoin desde el año pasado. 

Aunque el fork de Londres ha permitido a la red Ethereum quemar una parte de la tasa de gas que de otro modo se pagaría a los mineros, la minería de Ethereum parece ser aún más rentable desde la bifurcación gracias al precio de la criptomoneda. 

Los ingresos diarios de los mineros en dólares estadounidenses han aumentado más bien un 7,1% y han alcanzado un máximo de dos meses, según datos de Coin Metrics. La red ha quemado alrededor del 33% del crecimiento de la oferta de nuevas monedas desde la actualización, que es de 22.708 ETH y tiene un valor de $76.1 millones

Además de las tasas de prioridad —tasa de gas menos la tasa base quemada—, las subvenciones de bloque (similares a los premios de bloque de Bitcoin) y el valor máximo extraíble (MEV, por sus siglas en inglés) son las otras dos fuentes de ingresos para los mineros. El MEV es la cantidad de dinero que un minero de Ethereum puede ganar al ayudar a traders a insertar, dejar fuera o reordenar transacciones en un bloque.  

“Después del EIP 1559, seguimos recibiendo el MEV, 2 ETH de las subvenciones de los bloques y bastante del gas que dan algunas carteras”, dijo D’Aria. “Así que realmente no es un gran problema”.

Los mineros ya esperan que las tarifas de gas bajen a largo plazo a medida que se despliegan más soluciones de escala en Ethereum, lo que reducirá la congestión y las tarifas de transacción, dijo D’Aria. 

DeFi experimentó un crecimiento explosivo el verano pasado debido a un nuevo mecanismo de recompensa para los inversores que utilizan los protocolos de DeFi, mediante el cual pueden ganar nuevos tokens más allá de los rendimientos de los depósitos. El aumento de trading a través de varios protocolos en Ethereum ha aumentado drásticamente las tarifas de transacción, que se paga a los mineros por su trabajo para validar las transacciones. 

“Obtienes dos ETH de las subvenciones de los bloques y de cinco a siete más por los fees”, dijo D’Aria sobre los altos valores de transacción durante el boom de DeFi. Sin embargo, con un menor volumen de estas transacciones, las tasas de gas han disminuido para los mineros de Ethereum. “Eso fue una anomalía y a los mineros les apetece disfrutarlo mientras dure”, agregó.   

La minería de Ethereum suele tener unos costos operativos bajos en comparación con la minería de bitcoin. Aunque las GPU para minar sean caras y el funcionamiento de las máquinas requiera más mano de obra, el bajo consumo de energía podría compensar esos costos y reducir el gasto total, incluso más que el de la minería de bitcoin, dijo Vera. 

La fecha exacta de la migración histórica de Ethereum a POS es una incógnita, pero una inversión bien programada en la minería de Ethereum podría reportar grandes beneficios, afirma Vera. 

“Los mineros que apostaron contra el proof-of-stake hace dos años ganaron mucho dinero”, dijo Vera. “Si puedes apostar contra eso, el rendimiento podría ser bastante lucrativo”.

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When Uniswap launched in 2018, it became the first decentralized platform to successfully utilize an automated market maker system. 

An automated market maker (AMM) is the underlying protocol that powers all decentralized exchanges (DEXs). Simply put, they are autonomous trading mechanisms that eliminate the need for centralized exchanges and related market-making techniques. In this guide, we will explore how automated market makers work.

But first, let us take a look at what are market makers. 

What is a market maker?

Related: A Beginner’s Guide to Atomic Swaps

A centralized exchange oversees the operations of traders and provides an automated system that ensures trading orders are matched accordingly. In other words, when Trader A decides to buy 1 BTC at $34,000, the exchange ensures that it finds a Trader B that is willing to sell 1 BTC at Trader A’s preferred exchange rate. As such, the centralized exchange is more or less the middleman between Trader A and Trader B. Its job is to make the process as seamless as possible and match users’ buy and sell orders in record time. 

So, what happens if the exchange cannot find suitable matches for buy and sell orders instantaneously? 

In such a scenario, we say that the liquidity of the assets in question is low. 

• Liquidity, in terms of trading, refers to how easily an asset can be bought and sold. High liquidity suggests the market is active and there are lots of traders buying and selling a particular asset. Conversely, low liquidity means there is less activity and it is harder to buy and sell an asset.

When liquidity is low, slippages tend to occur. In other words, the price of an asset at the point of executing a trade shifts considerably before the trade is completed. This often occurs in volatile terrains like the crypto market. Hence, exchanges must ensure that transactions are executed instantaneously to reduce price slippages.

Related: ¿Qué es un token cripto semifungible?

To achieve a fluid trading system, centralized exchanges rely on professional traders or financial institutions to provide liquidity for trading pairs. These entities create multiple bid-ask orders to match the orders of retail traders. With this, the exchange can ensure that counterparties are always available for all trades. In this system, the liquidity providers take up the role of market makers. In other words, market-making embodies the processes required to provide liquidity for trading pairs. 

What is an automated market maker?

Unlike centralized exchanges, DEXs look to eradicate all intermediate processes involved in crypto trading. They do not support order matching systems or custodial infrastructures (where the exchange holds all the wallet private keys.) As such, DEXs promote autonomy such that users can initiate trades directly from non-custodial wallets (wallets where the individual controls the private key.) 

Also, DEXs replace order matching systems and order books with autonomous protocols called AMMs. These protocols use smart contracts – self-executing computer programs – to define the price of digital assets and provide liquidity. Here, the protocol pools liquidity into smart contracts. In essence, users are not technically trading against counterparties – instead, they are trading against the liquidity locked inside smart contracts. These smart contracts are often called liquidity pools. 

Notably, only high-net-worth individuals or companies can assume the role of a liquidity provider in traditional exchanges. As for AMMs, any entity can become liquidity providers as long as it meets the requirements hardcoded into the smart contract. Examples of AMMs include Uniswap, Balancer and Curve.

How do AMMs work?

There are two important things to know first about AMMs:

• Trading pairs you would normally find on a centralized exchange exist as individual “liquidity pools” in AMMs. For example, if you wanted to trade ether for tether, you would need to find an ETH/USDT liquidity pool.
• Instead of using dedicated market makers, anyone can provide liquidity to these pools by depositing both assets represented in the pool. For example, if you wanted to become a liquidity provider for an ETH/USDT pool, you’d need to deposit a certain predetermined ratio of ETH and USDT.

To make sure the ratio of assets in liquidity pools remains as balanced as possible and to eliminate discrepancies in the pricing of pooled assets, AMMs use preset mathematical equations. For example, Uniswap and many other DeFi exchange protocols use a simple x*y=k equation to set the mathematical relationship between the particular assets held in the liquidity pools.

Here, x represents the value of Asset A, y denotes the value of Asset B, while k is a constant. 

In essence, the liquidity pools of Uniswap always maintain a state whereby the multiplication of the price of Asset A and the price of B always equals the same number. 

To understand how this works, let us use an ETH/USDT liquidity pool as a case study. When ETH is purchased by traders, they add USDT to the pool and remove ETH from it. This causes the amount of ETH in the pool to fall, which, in turn, causes the price of ETH to increase in order to fulfill the balancing effect of x*y=k. In contrast, because more USDT has been added to the pool, the price of USDT decreases. When USDT is purchased, the reverse is the case – the price of ETH falls in the pool while the price of USDT rises.

When large orders are placed in AMMs and a sizable amount of a token is removed or added to a pool, it can cause notable discrepancies to appear between the asset’s price in the pool and its market price (the price it’s trading at across multiple centralized exchanges.) For example, the market price of ETH might be $3,000 but in a pool, it might be $2,850 because someone added a lot of ETH to a pool in order to remove another token.

This means ETH would be trading at a discount in the pool, creating an arbitrage opportunity. Arbitrage trading is the strategy of finding differences between the price of an asset on multiple exchanges, buying it on the platform where it’s slightly cheaper and selling it on the platform where it’s slightly higher.

For AMMs, arbitrage traders are financially incentivized to find assets that are trading at discounts in liquidity pools and buy them up until the asset’s price returns in line with its market price. 

For instance, if the price of ETH in a liquidity pool is down, compared to its exchange rate on other markets, arbitrage traders can take advantage by buying the ETH in the pool at a lower rate and selling it at a higher price on external exchanges. With each trade, the price of the pooled ETH will gradually recover until it matches the standard market rate.

Note that Uniswap’s x*y=k is just one of the mathematical formulas used by AMMs today. For instance, Balancer uses a much more complex form of mathematical relationship that lets users combine up to 8 digital assets in a single liquidity pool. Curve, on the other hand, adopts a mathematical formula suitable for pairing stablecoins or similar assets. 

The role of liquidity providers

As discussed earlier, AMMs require liquidity to function properly. Pools that are not adequately funded are susceptible to slippages. To mitigate slippages, AMMs encourage users to deposit digital assets in liquidity pools so that other users can trade against these funds. As an incentive, the protocol rewards liquidity providers (LPs) with a fraction of the fees paid on transactions executed on the pool. In other words, if your deposit represents 1% of the liquidity locked in a pool, you will receive an LP token which represents 1% of the accrued transaction fees of that pool. When a liquidity provider wishes to exit from a pool, they redeem their LP token and receive their share of transaction fees.

In addition to this, AMMs issue governance tokens to LPs as well as traders. As its name implies, a governance token allows the holder to have voting rights on issues relating to the governance and development of the AMM protocol. 

Yield farming opportunities

Apart from the incentives highlighted above, LPs can also capitalize on yield farming opportunities that promise to increase their earnings. To enjoy this benefit, all you need to do is deposit the appropriate ratio of digital assets in a liquidity pool. Once the deposit has been confirmed, the AMM protocol will send you LP tokens. In some instances, you can then deposit – or “stake” – this token into a separate lending protocol and earn extra interest. 

By doing this, you will have managed to maximize your earnings by capitalizing on the composability, or interoperability, of decentralized finance (DeFi) protocols. Note, however, that you will need to redeem the liquidity provider token to withdraw your funds from the initial liquidity pool. 

What is impermanent loss?

One of the risks associated with liquidity pools is impermanent loss. This occurs when the price ratio of pooled assets fluctuates. An LP will automatically incur losses when the price ratio of the pooled asset deviates from the price at which he deposited funds. The higher the shift in price, the higher the loss incurred. Impermanent losses commonly affect pools that contain volatile digital assets.

However, this loss is impermanent because there is a probability that the price ratio will revert. The loss only becomes permanent when the LP withdraws the said funds before the price ratio reverts. Also, note that the potential earnings from transaction fees and LP token staking can sometimes cover such losses.

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Crypto back-end firm Alchemy is expanding its free services in an attempt to woo more coders into the blockchain development space.

The infrastructure startup, which helps crypto companies read and write data from blockchains, said the move is designed to make it easier for up-and-coming developers to gain a footing, whether they are building decentralized finance (DeFi) portals or non-fungible token (NFT) marketplaces. 

Paul Almasi, head of growth for Alchemy, said projects should be able to “unfold at a higher velocity” with more easy access to developer services.

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In the long term, those free-tier customers could end up growing, and paying Alchemy, for more. That’s what happened with early clients OpenSea and CryptoPunks, Alchemy said in a press release. 

The firm said on-platform developer activity increased 500% in the months following its last free-tier expansion in January. The new increase, which is substantially larger, is expected to juice activity further.

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