Bitcoin’s price surge early Monday led a rally in so-called altcoins, with aave (AAVE), chainlink (LINK) and bitcoin cash (BCH) notching double-digit percentage gains.
Bitcoin briefly broke above $39,000 Monday for the first time since June 16. The cryptocurrency is currently trading its sixth consecutive day in the green, up 12% in 24 hours.
Executives from Tether are potentially facing a criminal probe into bank fraud, Bloomberg reported Monday.
UPDATE (July 26, 2021, 16:31 UTC): Updated with additional context and a statement from Tether.
Related StoriesLyra, an options trading protocol built on Ethereum scaling network Optimism, received $3.3 million in a seed round led by Framework Ventures and ParaFi Capital.
The DeFi Alliance, Orthogonal, Robert Leshner’s Robot Ventures and Apollo Capital also participated in the round.
The decentralized finance (DeFi) project, which just launched its testnet less than a month ago, is expected to launch on mainnet in September.
Related: The Tether Put: Crypto Equivalent of Credit Default Swap?
As DeFi continues gaining traction, on-chain financial products that mirror those seen in traditional finance, from structured products to derivatives, are growing in popularity, but the options market has struggled to find traction.
Lyra is integrated with Synthetix, a trading platform that also uses Optimism. The tie-up with Synthetix allows Lyra to hedge risk for liquidity providers. Risk management enables Lyra to keep fees low for traders.
“Options have been a core missing piece in the DeFi stack,” ParaFi Capital’s Santiago Roel Santos said in a statement. “Lyra’s novel on-chain pricing mechanism, Synthetix integration, and deployment on Optimism will introduce traders and liquidity providers to a scalable and capital-efficient options protocol.”
Lyra’s team plans to use the money from the seed round to hire additional engineers.
Related StoriesThe number of crypto ATMs installed globally has increased by more than 70% to 24,030 this year.
Bitcoin (BTC) buyers were active over the weekend as the cryptocurrency broke above the 50-day moving average near $34,000. The intermediate-term downtrend is reversing, although resistance near $40,000 could trigger some profit taking.
Upside momentum is improving after several months of consolidation and multiple oversold readings on the charts. Bitcoin was trading around $38,000 at press time and is up 10% over the past 24 hours. Early Monday, the price climbed to about $39,500.
Binance is set to stop its crypto margin trading involving sterling, the euro and Australian dollar, as the world’s large cryptocurrency exchange seeks to stave off a widespread regulatory backlash against some of its services.
Man Group CEO Luke Ellis compared crypto to tulip bulbs saying it has “no inherent worth whatsoever.”
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Binance-based bitcoin perpetual futures denominated in dollar-backed stablecoin tether (USDT) spiked early Monday, widening the spread over the spot market price to more than $8,000.
The BTC/USDT perpetual contract hit a high of $48,168 at around 01:00 UTC, Binance data show. Around the same time, bitcoin jumped almost $3,000 in the spot market, reaching a 1 1/2-month high of $39,544, according to CoinDesk 20 data. The cryptocurrency looked poised for a rally, having toppled the widely-tracked 50-day moving average (MA) resistance at $35,000 during overnight trading.
The exaggerated bullish move in the perpetual contract probably resulted from a big trade.
Related: Bitcoin Rallies from Oversold Levels; Resistance Nearby
“A user placed a large number of [buy] orders for BTCUSDT perpetual futures during the market upswing, resulting in a candlewick of 48,168 USDT,” Binance’s spokesperson told CoinDesk in a Telegram chat. “We reviewed and did not detect any system issues. No other users were affected as we utilize mark price for liquidation,” the spokesperson said.
Binance is the world’s largest bitcoin futures exchange, contributing $3.5 billion or nearly 10% of the global open interest of $13.9 billion, according to data provided by Skew. Open interest refers to the number of futures contracts traded but not matched by an offsetting position.
Aside from large buy orders, short liquidations or forced closure of sell positions due to margin shortage may have added upward pressure on prices.
According to data source Coinalyze, major exchanges including Binance have liquidated futures positions worth more than $650 million today. Of that, short liquidations account for almost 85%, or $550 million. The data show that futures market positioning was skewed bearish. The number of open futures contracts rose steadily since late May to hit a two-month high last week as traders took short positions.
Related: Binance Says It’s Cutting Leverage Limit to 20x, a Day After FTX Announces the Same
The crypto derivatives market has seen explosive growth since the March 2020 crash. One effect of that is price volatility caused by long-short liquidations. “We would like to take this opportunity to remind the community that the crypto market can be volatile and all trading carries risks. We advise all users to trade responsibly and only trade within their means,” Binance’s spokesperson said.
The situation may improve going forward as Binance and FTX, two of the biggest exchanges, have imposed limits on leverage. Binance CEO Changpeng Zhao, announced early today that it had imposed a 20x leverage limit for new users starting from July 19, down from the original 100x leverage. Zhao said the new limit would be applied to existing users progressively over the next few weeks.
At press time, bitcoin was changing hands near $38,200, representing a 10% gain on the day. Meanwhile, the Binance-based BTC/USDT perpetual contract was trading at a slight discount of $38,100.
Also read: Bitcoin Breaks Back Above $39K in Largest Single Daily Gain in 6 Weeks
Related StoriesBinance, the world’s largest crypto exchange by trading volume, said it is reducing the maximum leverage users can use to trade futures contracts, a day after derivatives exchange FTX announced the same change, moves perhaps designed to help avoid the worst of a coming regulatory storm.
A leading blockchain industry body in Australia says the country’s current regulatory framework for crypto falls short, particularly when it comes to derivatives trading.
Blockchain Australia (BA) has written to the country’s Senate Select Committee on Australia as a Technology and Financial Centre, making three primary recommendations, according to a paper released on Friday.
Its recommendations are in response to the committee’s request for submissions from industry participants on how to improve Australia’s standing as a “technology and financial” hub. The industry body is calling for a “coordinated and graduated approach” to the regulation of digital assets.
Related: Australia’s Zip to Launch Crypto Services in a Year: Report
BA’s recommendations include implementing immediate safe harbor provisions for crypto providers, greater regulatory guidance, and engagement in the short-term while in the long-term overseeing the establishment of a “fit-for-purpose legislative framework.”
“A staged fit-for-purpose approach, as recommended in the submission, requires consultative and considered commitment of resources,” BA CEO Steve Vallas told CoinDesk via Telegram. “The submission details the accelerating pace of development across the world. The opportunity for Australia to lead a regulatory discussion will pass.”
It’s not the first time BA has asked for greater regulatory clarity and considerations for a measured approach to regulating blockchain and crypto. In February the body put forward recommendations to the same committee over the need for more support from the federal government and regulators to boost the confidence of the country’s blockchain businesses.
The first step, BA recommends, should provide crypto asset providers with a window of time until the introduction of guidance or legislation occurs. “Any legislation should contain an appropriate transition period and not apply retrospectively,” the paper reads.
Related: Australia’s Mawson Infrastructure Increases Count of Bitcoin Mining Machines in US Operation
BA also says a “new licensing regime modelled off the existing Australian Financial Services Licence,” should be implemented to allow the provision of cryptocurrency financial advice from those involved. Crypto derivatives under the existing licensing legislation are “fundamentally different” from traditional derivatives, argues BA.
“Australia’s regulatory framework does not take into account such products,” the paper reads. BA says continuous disclosure rules in respect to price-sensitive announcements, custody, clearing and settlement rules, and trading halts are inappropriate for the crypto derivatives market.
The committee says it is taking further evidence before delivering a final report with additional recommendations in October.
Related StoriesBitcoin briefly traded above $39,000 for the first time since June 16 and is currently trading its sixth consecutive day in the green.
Prices have continued to rally since July 21 with Sunday’s current price rise representing the largest single daily gain in over six weeks. The world’s oldest crypto is changing hands for around $38,250, having cooled slightly after hitting a monthly high of around $39,850.
Datamish data show a short squeeze appears to have driven prices higher as those betting on bitcoin heading lower had to sell in quick succession to cover. The reason remains unclear.
Related: Is US Crypto Regulatory Bluster About to Become Action?
“This price action is aligning with what we’ve been seeing the past couple of weeks,” said Daniel Kim, head of capital markets at Maple Finance. “Borrowing rates for USD have started to increase from its lows.”
“We’ve also been seeing a significant increase in demand for USDC from institutional borrowers and the sentiment seems to be bullish following the news of Amazon participating in bitcoin,” Kim added.
An unconfirmed single-source story in City A.M. has reported retail giant Amazon is looking to accept bitcoin payments by year’s end and is considering minting its own token by 2022. The retail giant is also seeking a Digital Currency and Blockchain Product Lead, CoinDesk previously reported.
CoinDesk attempted to contact Amazon but did not receive a reply by press time.
Related: Market Wrap: Bitcoin Analysts Expect a Short-Squeeze
Daily volume on the Bitstamp exchange is still relatively lower than the average from previous days this year but is beginning to show some signs of revival from the breakdown witnessed in May.
Other notable cryptos in the top 10 by market capitalization are also posting gains over a 24-hour period with chainlink, polkadot and bitcoin cash up the most between 8%-12%.
UPDATE (July 26, 2021, 2:14 UTC): Adds details on bitcoin’s short squeeze.
Related Stories“Stoner Cats,” an animated web series produced by actress Mila Kunis, already has an A-list Hollywood cast including Jane Fonda, Chris Rock and Ashton Kutcher.
But the blockchain-linked TV show is also adding some crypto star power: Ethereum creator Vitalik Buterin.
To watch the first five-minute episode, viewers must purchase a non-fungible token (NFT) that is both a digital artwork of a randomly selected character from the show as well as a ticket to unlock all “Stoner Cats” episodes as they are made. The NFTs will sell for 0.35 ETH – about $750 at time of publication.
Related: Crypto Long & Short: Why Ethereum’s ‘London’ Upgrade Matters
According to Morgan Beller, a general partner at venture firm NFX and a member of the team behind “Stoner Cats,” the decision to use NFTs to fund the series arose out of concerns over censorship of the show’s drug content and a desire to keep creative control out of the hands of the networks.
“Stoner Cats” isn’t the first creative project to try crypto crowdfunding. Earlier this month, the documentary team behind “Ethereum: The Infinite Garden” raised over 1,000 ETH on Mirror, surpassing their goal in less than three days. Crowdfunding via NFT sales allows for a direct exchange between consumers and creators, cutting out middlemen and, in some cases, offering a bit of creative control to consumers themselves.
Vitalik in the spotlightButerin, who is also involved in the Ethereum documentary, will join the cast of “Stoner Cats” as the voice of Catsington, a taxidermied, monocle-sporting cat who gives advice to the five living cats belonging to Ms. Stoner, a spunky octogenarian with Alzheimer’s, whose magical strain of weed has somehow given her feline companions the ability to talk.
The quirky cameo for Ethereum’s de facto leader comes as the network preps for a proof-of-stake overhaul meant to ready the world computer for mainstream usage. It also explains a recent tweet in which Buterin casually explains Ethereum in what appears to be the kitchen nook of Kunis and Kutcher’s shared home.
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Though the “Stoner Cats” script was written before Buterin joined the cast, Beller said he tweaked the role of Catsington to better fit his personality.
“He doesn’t like cursing and his character said ‘fuck’ a few times, so he asked if they could change that and they were accomodating,” Beller, who left Facebook in September 2020 after co-creating the Libra project, told CoinDesk.
The entire cast, including Buterin, will be paid in ether.
“We had to teach Jane Fonda how to set up a MetaMask wallet,” Beller joked, adding:
“I know some other celebrity NFT projects have a centralized person who cashes out and pays everyone in dollars, which would have been a lot easier for everyone involved, but it just felt really wrong to do that. The technology is what is enabling us to do this, so to just drop it like it’s hot felt really wrong.”
Each cast member will be paid an equal amount, depending on the level of funding the project receives at its initial NFT launch. To finish the season, the “Stoner Cats” team needs to reach at least 50% of its 10,420 NFT funding goal.
But according to Beller, even if the project is fully funded at approximately $7.5 million, the cast would only be making about half of what they would make on an equivalent, traditionally funded project.
“Everyone’s really taking a bet on this,” Beller said, adding:
“We see this as an opportunity to educate people [about crypto] and bring them into the fold. I personally think a lot of crypto resources are daunting. I think we need people and faces and voices that non-crypto people recognize and trust to start explaining these concepts. Even if this fails, we can make that happen.”
Related StoriesIn a move perhaps designed to help dodge the worst of a coming regulatory storm, the head of a large cryptocurrency derivatives exchange said Sunday he’s limiting the amount of margin-trading debt traders can wager from 100 times leverage to 20 times.
UPDATE (July 25, 20:00 UTC): Adds background about FTX and Binance at bottom.
Related StoriesEmbattled cryptocurrency lender BlockFi is facing scrutiny from regulators in a fourth state, Vermont, over the legality of its interest account product.
According to BlockFi’s website, securities regulators in Vermont have issued an order on the matter. What that order said is not yet known.
But it comes as agencies in Alabama, Texas and New Jersey are investigating whether the firm’s marquee offering, the BlockFi Interest Account (BIA), violates local securities laws. New Jersey has given BlockFi until July 29 to explain itself before the state bars the firm from opening new accounts.
Related: Crypto News Roundup for July 23, 2021
BlockFi has countered that it does not believe BIA is a security. It said it is in active discussions with regulators on the matter.
Neither BlockFi nor the Vermont Department of Financial Regulation responded to a request for comment from CoinDesk.
Related StoriesUniswap Labs is restricting access to some tokens, including tokenized stocks and derivatives on the protocol interface that it supports, the software development studio said in a blog posting Friday.
The news comes days after U.S. regulators’ announcement that that they would increasingly scrutinize these types of products. Uniswap cited an “evolving regulatory landscape” in explaining its decision.
“Consistent with actions taken by other DeFi interfaces, we have taken the decision to restrict access to certain tokens through app.uniswap.org,” the blog entry said.
Related: NatWest Blocks Payments to Binance as Starling Joins the Chorus
Other crypto companies have similarly canceled their tokenized stock products in recent weeks, including Binance. However, unlike Binance, a centralized exchange, Uniswap is only restricting access through its own interface. Users can still access these tokens through other portals on the decentralized finance (DeFi) platform that supports them.
The broader crypto industry is facing increasingly vocal attention from regulators, including prominent U.S. officials. On Tuesday, Securities and Exchange Commission (SEC) Chair Gary Gensler said in a speech before the American Bar Association that stock tokens on both centralized and decentralized platforms would have to be registered with the regulator.
Related StoriesBrazil’s civil police seized R$172 million ($33 million in U.S. dollars) amid an investigation into money laundering carried out through crypto exchanges.
During an operation known as “Exchange” that took place in Sao Paulo and Diadema, Brazilian police carried out six search warrants, after which the Brazilian judiciary authorized freezing accounts and seizing assets from two individuals and 17 companies, according to an official statement that did not name them.
The investigation found that crypto exchanges acquired and sold bitcoin to fictitious companies fabricated to facilitate their creators’ access to the banking system.
Related: FTX Crypto Exchange Valued at $18B in $900M Funding Round
In a five-month period, one of the exchanges transacted $1.93 million in digital assets with six bogus companies, while eight other bogus companies acquired $2.9 million in cryptocurrencies in the same period, the police said.
The exchanges did not verify the legitimacy of the entities they dealt with or the transactions’ origin, the Brazilian police said, adding that the exchanges knowingly operated on behalf of a criminal organization dedicated to laundering money through cryptocurrencies.
According to the investigation, money was sent to offshore companies and subsequently repatriated by simulating sales or service provision transactions.
Preliminary investigations indicated that the companies conducted large transactions among themselves and then routed money to intermediaries, who were responsible for the acquisition of digital assets and the delivery of a hash code to their clients.
Related StoriesBitcoin pulled back on Friday after rising nearly 10% earlier this week. The cryptocurrency was trading around $32,000 at press time and is up about 2% over the past seven days. Ether, the world’s second largest cryptocurrency, is holding above $2,000 and is up about 6% over the past week.
Upside momentum is improving, which could keep crypto buyers active into the weekend. Some analysts expect a short-squeeze to push bitcoin above the 50-day moving average around $34,000 given oversold conditions on the charts.
“For the first time in many weeks we are seeing bullish signs here and expect Bitcoin to head towards the upper end of the $30,000-$40,000 range,” wrote Pankaj Balani, CEO of Delta Exchange, in an email to CoinDesk.
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Cryptocurrencies:
Traditional markets:
“On the options front we have seen a good amount of covering between the $35,000-$40000 strikes for the weekly maturity,” Balani wrote. “For the July expiry there is still decent open interest in the $35,000 strike, which should act as a ceiling for BTC for this month.”
Overall, risk sentiment is improving in traditional and crypto markets as concerns about tighter monetary stimulus wane. On Thursday, the European Central Bank (ECB) pledged to keep interest rates lower for longer and adjusted its policy stance to allow for a slight overshoot of the 2% inflation target.
Related: Money Reimagined: Regulate Stablecoins, Don’t Smother Them
The ECB announcement along with a broad decline in global government bond yields contributed to higher stock prices over the past week. Aside from the reach for yield, improving sentiment and positive comments from Tesla CEO Elon Musk on Wednesday kept crypto bulls active.
Bitcoin options probabilityBitcoin options traders are pricing an 8% chance of the cryptocurrency rising to a new peak above $64,800 by Dec. 31, according to data source Skew.
Additionally, six-month implied volatility, or investors’ expectations for price turbulence, has dropped to a more than two-month low of 80% at press time, having peaked at 122% on May 17.
That implies investors expect the price consolidation to continue for a while, wrote CoinDesk’s Omkar Godbole.
Short-squeeze expected“If BTC retains the lower range of 30K, shorts will begin to squeeze as BTC moves to the middle point of the range, likely accelerating in the coming days/weeks,” wrote Sashimi Nakamoto on CryptoQuant.
The chart below shows the bitcoin leverage ratio, which is open interest divided by exchange reserves, reaching the highest level since April. The bitcoin funding rate is slightly negative, which indicates higher short interest than long interest, according to Nakamoto.
The funding rate measures the cost to fund long positions in the market for bitcoin perpetual swaps, a type of derivative in the cryptocurrency markets similar to futures contracts in traditional markets.
Crypto fund flows weakenSince June, total assets under management across exchange-traded and over-the-counter-traded digital asset investment products decreased by 14% to $34.8 billion.
Compared with traditional asset classes, digital asset markets still have a “long way to go before more risk-averse investors are fully at ease,” according to a report by CryptoCompare.
NFT impact on ether priceAs NFTs gain popularity despite an overall bearish sentiment in the crypto market, some NFT critics inside the market took to Twitter blaming the non-crypto natives who cash out their ether immediately after NFT sales for the lackluster price movement of the second-largest cryptocurrency by market capitalization.
But according to multiple analysts and market participants, the impact of NFT sales, if any at all, remains a nonfactor on ether’s prices. Instead, the complaint showcases many traders and investors’ frustrations in a dull market.
The speculation “is more like a reflection of the current market sentiment,” Daniel Lv, co-founder of China-based blockchain Nervos Network, told CoinDesk’s Muyao Shen through a representative.
The blame, though, isn’t completely irrational since growth in the NFT market has not quite slowed down partly because of the large number of endorsements it has received from non-crypto celebrities.
Altcoin roundupMost digital assets on CoinDesk 20 ended up lower on Friday.
Notable winners as of 21:00 UTC (4:00 p.m. ET):
Notable losers:
Related StoriesPayPal has poached a top policy exec from Chainalysis, the industry’s largest crypto-tracing company.
Jesse Spiro, formerly Chainalysis’ head of policy and regulatory affairs, is heading to PayPal’s crypto wing to work on regulatory policy. He said the new role was “extremely attractive and exciting,” citing the digital giant’s size and potential to bring cryptocurrency to the payments sector.
“At PayPal I’ll be supporting regulatory affairs for their crypto business and I can’t tell you how exciting that is in relation to the future of crypto and what the future landscape is going to look like,” Spiro told CoinDesk.
Related: Bitstamp Names Kraken Veteran Zagotta as New US Chief Executive
Spiro will begin the new role on Aug. 2.
PayPal debuted its bitcoin buying and selling functionality in October 2020 following reports by CoinDesk in June 2020 that a crypto service for the fintech giant was in the works.
The publicly traded company has since become a pillar of crypto’s mainstream moment, acquiring a crypto custodian in March and announcing in May that it was working to enable crypto withdrawals. PayPal reports its second-quarter earning on July 28.
“The fact that PayPal has the global reach that they do, the technology and the resources behind them and the fact that as an MSB [money services business] of their size [they have] embraced cryptocurrency, I think it’s so exciting,” Spiro said.
Related StoriesCrypto lender Celsius confirmed Friday that it had invested $54 million in bitcoin miner Core Scientific.
The funding is part of Celsius’ planned $200 million investment in bitcoin mining in North America, according to the company. Celsius said the investment, which occurred during the second quarter, would make it one of the largest U.S. investors in the bitcoin mining industry.
Celsius CEO Alex Mashinsky described the deal in a CoinDesk interview as “good for our community.” He added: “They (Core) have a lot of assets. That’s safer than just investing in a DeFi project.”
Related: Core Scientific Plans to Go Public in SPAC Deal
Core Scientific is the largest host of bitcoin mining machines in North America.
The announcement comes just two days after Core Scientific said that it planned to list its shares on Nasdaq through a merger with Power & Digital Infrastructure Acquisition. The miner will have a value of $4.3 billion.
In May, Michael Levitt, the co-founder and chairman of Core Scientific, took over as CEO after Kevin Turner stepped down.
Mashinsky sees these developments positively, noting that the merger would allow Core “to raise even more money.”
Related: Only 4%? Coinbase Rate on USDC Reveals Focus on Crypto Credit Risk
“Companies go through changes all the time,” he said.
He also highlighted Core’s carbon-neutral infrastructure. Mashinsky said that last month, Celsius had joined the Bitcoin Mining Council, the voluntary organization of miners and high-profile members of the Bitcoin community concerned about mining’s environmental impact.
In the company’s statement, Mashinsky said that Celsius was “looking forward to working together to grow our joint business in the future.”
UPDATE (July 23, 20:36 UTC): Adds comments from Mashinsky and details of Celsius membership in the Bitcoin Mining Council.
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