Today’s news on Crypto

1.Bitcoin’s problem may be bond yields: It’s been a wild 24 hours for Bitcoin, capping off a down week following a wave of negative headlines and rising bond yields which pushed prices down to the $25,000 level before rebounding slightly Friday.

The largest crypto by market value fell for the sixth consecutive day with losses of over 11%, as tracked by Dow Jones Market Data Group.

Much of the crypto speculation on the downside volatility came after the Wall Street Journal reported  late Thursday that Elon Musk’s SpaceX wrote down or jettisoned $373 million of Bitcoin.

ELON MUSK’S STARLINK HELPING MAUI FIRE RECOVERY

Inquiries by FOX Business to SpaceX were not immediately returned.

Bitcoin Magazine, in a post on X, the social-media website formerly known as Twitter, questioned the accuracy of the reported sale or reduction.

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While Bitcoin Foundation Chairman Brock Pierce told FOX Business that the report may have contributed to the selloff, he also noted what may have an even bigger impact: rising Treasury yields.

CRYPTOCURRENCIES: LIVE MARKET PRICES

“You have a number of other things that are called broader market based, like rising interest rates. And when you sit back and the government is paying high yields, but why take risk when you know government is going to pay a high yield and people move out of riskier investments to safer fund like investment products?” he noted.

On Thursday, the yield on the 10-year hit 4.307%, a new 52-week high. The safety of this government debt is now at the highest since November 2007, as tracked by Dow Jones Market Data Group. Yields slipped slightly on Friday.

The Federal Reserve has raised interest rates 11 times to a 22-year high of 5.25% to 5.5%, and minutes from the last meeting, released this week, showed policymakers are still concerned about inflation, which may require more rate increases.

INFLATION MAY REQUIRE MORE RATE HIKES: FED MINUTES SIGNAL

Additionally, the WSJ Dollar Index has been strengthening, up seven consecutive trading days, the largest seven-day point and percentage gain since Monday, July 24, 2023, as tracked by Dow Jones Market Data Group.

Selling of bullish crypto positions have topped $1 billion, the most since June 2022, according to a research note by Hani Abuagla, senior market analyst at XTB.

2. El Salvador Diary: Lightning Is Key to Bitcoin Adoption:

This week, as I travel around El Salvador, I met with two people who are actively working to help increase the speed of Bitcoin adoption and to help foreign investors start Bitcoin-related businesses.

The current market price of Bitcoin, approximately $29,500, puts the prospect of owning a full bitcoin outside of the reach of most people. However, each bitcoin is subdivisible into one hundred million sub-units called “satoshis,” allowing anyone to exchange fiat-to-bitcoin in smaller amounts. Bitcoin investors refer to investing in smaller increments as “stacking sats.” This, paired with Layer Two (L2) integrations like the Lightning Network, are seen by many as the pathway to increasing Bitcoin use cases and elevating its role as a medium of exchange in commerce.

Jonathan Martin is a graduate of Stanford University, Georgetown University, and a student at The Wharton School, currently on leave immersing himself in the world of Bitcoin in El Salvador. His first diary entry is here.

I met with a Salvadoran entrepreneur named Edgar Borja for lunch, the founder of a company called K1, to learn about what he is building. Borja invented a Lightning-enabled ATM that massively reduces the frictional costs associated with the fiat-to-bitcoin conversions compared to other Bitcoin on-ramps that utilize the Layer One (L1) blockchain.

Shortly after sitting down for lunch, Borja pulled out a small metal box from his backpack with an LCD touch screen and placed it on the table. He plugged it into the wall and booted it up while explaining the technology it utilizes. The version of the device that he brought only accepted coins and looked like a mini slot machine. He said that K1 sells another version of the device that accepts fiat dollar bills.

Borja deposited 5 cents into the coin slot, tapped once or twice on the LCD screen, and directed me to hold up the QR code for my Lightning-enabled wallet (called Wallet of Satoshi) on my iPhone to the embedded camera. Within seconds, the equivalent of 5 cents in Satoshis arrived in my wallet. There was no fee associated with the transaction.

3. Cryptocurrency Prices And News: Bitcoin Hits Two-Month Low; SpaceX Abandons Its Crypto:

Cryptocurrency prices traded lower Friday after tumbling late Thursday. Bitcoin and ethereum fell to two-month lows. Crypto liquidations reached over $1 billion over the past 24 hours as of Friday morning. Much of the selloff occurred following reports that SpaceX liquidated its bitcoin holdings.

Elsewhere, financial disclosures reveal former President and defendant in multiple federal and state court cases Donald Trump sits on a hefty crypto war chest.

Over the weekend, Cathie Wood and ARK Invest’s bitcoin ETF application received a delay from the SEC. And on Friday, former FTX CEO Sam Bankman-Fried was ordered to jail on Friday after a judge revoked his bail for alleged witness tampering.

4. SpaceX Posts Q1 Profit, Abandons Bitcoin Holdings; Cryptocurrencies Crash:

New SpaceX financial documents reported by the Wall Street Journal provide a rare look into Elon Musk’s private rocket company. Cryptocurrency prices swung wildly after the late Thursday report, which revealed SpaceX sold its bitcoin holdings.

SpaceX posted a Q1 2023 profit of $55 million on $1.5 billion in revenue after two years of major, but narrowing losses, the WSJ reported.

The Hawthorne, Calif.-based company recorded $5.2 billion in total expenses for 2022, increasing from $3.3 billion in 2021. Fiscal 2022 revenue doubled to $4.6 billion with a loss of $559 million, improved from a loss of $968 million the year prior.

SpaceX generated $2 billion in capital from issuing stock last year, up from $1.5 billion in 2021. The company is valued around $150 billion following an employee stock sale in June.

Property and equipment expenses totaled $5.4 billion during last year and 2021 with significant research and development costs.

Meanwhile, results benefited from several moves. The company executed price increases for Falcon rocket missions. SpaceX boosted its Starlink prices for U.S. residential subscribers in 2022. In April, SpaceX raised the price of Starlink services by 9% to $120 per month for residential customers where internet capacity is limited. Subscribers in locations with excess internet capacity received a price cut to $90 from $110.

The company launched a Falcon 9 rocket carrying 22 Starlink satellites on Wednesday and the Falcon 9 returned to earth that evening. The next SpaceX launch is scheduled for Aug. 21. The next mission in the company’s collaboration with NASA is set to launch Aug. 25.

SpaceX Sells Bitcoin Holdings

SpaceX sold its bitcoin holdings after writing down the value by $373 million in 2021 and 2022, the WSJ reported. Tesla (TSLA) had sold 75% of its bitcoin holdings last year.

Meanwhile, bitcoin, ethereum and other cryptocurrency prices tumbled late Thursday, but it was unclear if the SpaceX report was the cause.

Crypto liquidations reached over $1 billion over the past 24 hours as of Friday morning, Coinglass data shows. The bitcoin drop below $28,500 caused “material volumes” of long-bitcoin orders being liquidated, combined with spot-selling ahead of order dates. That sparked the main sell-off, Decentral Park Capital trader Lewis Harland told CoinDesk.

Bitcoin price fell as low as $25,392.05 Thursday evening, hitting a two-month low. It’s trading near $26,000 late Friday, down 6.6% over the past 24 hours. Bitcoin had already retreated from about $28,600 to $27,600 on Thursday before the SpaceX news, as a strong dollar and risk-off trading weigh on cryptocurrencies.

Ethereum skidded to $1,656 late Friday from its Thursday high around $1,790. Dogecoin fell 3.4% to 6.4 cents.

COIN stock pared losses to 3.1% Friday after retreating 4.8% in premarket trade. Crypto miners Marathon Digital (MARA) saw MARA stock tumble 7.9%, while Riot Platforms (RIOT) fell 5.5%. In Thursday’s session, Coinbase (COIN) retreated 4.35% while Marathon Digital plunged 9.3% and RIOT stock 10.6%.

5. Bitcoin Pizza Day: Celebrating the $80 Million Pizza Order

May 22, 2023, marks the 13-year anniversary of the first Bitcoin transaction, in which a Florida man paid for two pizzas with the cryptocurrency. The day has become part of folklore, not because of the transaction, but more the price: the man in question paid 10,000 Bitcoins, which today is worth almost $270 million, for the two pizzas.1

On May 22, 2010, now known as Bitcoin Pizza Day, Laszlo Hanyecz agreed to pay 10,000 Bitcoins for two delivered Papa John’s pizzas. Organized on bitcointalk forum, the Florida man reached out for help. “I’ll pay 10,000 bitcoins for a couple of pizzas.. like maybe 2 large ones so I have some left over for the next day,” Hanyecz wrote.

“I like having left over pizza to nibble on later. You can make the pizza yourself and bring it to my house or order it for me from a delivery place, but what I’m aiming for is getting food delivered in exchange for bitcoins where I don’t have to order or prepare it myself, kind of like ordering a ‘breakfast platter’ at a hotel or something, they just bring you something to eat and you’re happy!”

A British man took up Hanyecz’s offer and bought the two pizzas for him in exchange for the 10,000 Bitcoins. Even then the recipient of the Bitcoins got himself a bargain, paying $25 for the pizzas, while 10,000 Bitcoins were worth around $41 at the time.2

Since the inception of Bitcoin, Hanyeczs’ pizzas have got more and more expensive. Nine months after the purchase, Bitcoin reached parity with the U.S. dollar, making the two pizzas worth $10,000 and in 2015—the fifth anniversary of Bitcoin Pizza Day—the two pizzas were valued at $2.4 million. On May 22, 2023, Bitcoin is at just over $26,850, making the pizzas worth…you get it.

Despite the astronomical rise in the price of Bitcoin it seems Hanyecz is not phased about his deal. “It wasn’t like Bitcoins had any value back then, so the idea of trading them for a pizza was incredibly cool”.

6. Bitcoin Nosedive Jolts Crypto Market Out of Its Summer Stupor:

For the past several months, the hallmark volatility that previously attracted hordes of investors to the world’s largest cryptocurrency has been absent, with the rate of its swings reaching its lowest point since 2016.

That lull snapped Thursday, when Bitcoin plunged more than 8% in the space of a few hours to a two-month low of $25,314 late in the New York day. The slump sparked a broad decline across all of crypto, leading to more than $1 billion in liquidations and putting Bitcoin on pace for its worst week since November and crypto exchange FTX’s collapse.

The carnage — fueled by the prospect of prolonged high interest rates and exacerbated by thin crypto trading — was a reminder of the various threats that continue to stalk digital assets, from hostile regulators to a broader rout in risk assets. And even as Bitcoin has recovered smartly from last year’s lows, many investors are still sitting out, depriving the market of the breadth and depth that are key ingredients for a sustained bull run.

7. Bitcoin Calm Shatters With Sudden Tumble, Mass Liquidations:

The rout pushed Bitcoin from near $29,000 to as low as $25,314 in a 24-hour span. More than $1 billion of positions were unwound in the selloff, according to Coinglass data. The original cryptocurrency was down 5.7% to $26,057 as of 3:29 p.m. in New York.

Bitcoin remains about 60% above where it started the year, handily beating other well-performing assets like technology stocks. But a multitude of headwinds — from rising bond yields to regulatory pressures and economic weakness in China — threaten to undermine the appeal of assets like cryptocurrencies.

8. Curve Crisis Averted, NFT Loans Protocol Now Votes on Next Steps:

The NFT-backed loans protocol that lost nearly $12 million in crypto during the recent Curve exploit (and then paid a $1 million bounty to get most back) now has to decide how to fill the hole.

JPEG’d is a NFT-collateralized crypto lending app that issues customers a derivative of ETH, called pETH, that’s tied to their loans. Hungry to earn extra interest, many of those customers parked their pETH in a protocol-endorsed liquidity pool on Curve, the popular trading protocol on the Ethereum blockchain.

Their yield bet went bad when in early August exploiter drained that pool and others. But JPEG’d agreed to pay the exploiter a 611 ETH bounty to get 5,495 ETH (90%) back. The move saved the protocol from financial uncertainty and its customers from complete decimation on their positions.

But someone has to eat the missing 611 ETH. In a vote running until Saturday, investors governing the JPEG’d DAO are choosing between six proposals that each place that burden on a slightly different party. The option that’s overwhelmingly in the lead splits the pain between non-paying customers of JPEG’d and the DAO itself.

Called option D, it would see pETH price speculators and yield farmers who did not deposit into Curve via JPEG’d in-house service, called Citadel, get most of their money back, but not all. That’s in contrast to paying customers: pETH minters who paid a small fee to earn interest in a Curve pool through Citadel. They get made entirely whole.

The DAO will incur a net loss of 484 ETH (about $802,000) and 861 million JPEG tokens (about $450,000) under this plan. It also plans to replace pETH with a new derivative token that it will airdrop to all holders, but that will happen no matter what option wins.

A pseudonymous user experience, or UX, developer for JPEG’d who goes by the screen name 0xtutti said option D is an “in-between” solution to the sticky problem. But “everyone gets a share of the recovered assets” no matter which option wins out.

“Generally the community cared about protecting paying customers as much as possible,” 0xtutti said.

9. What Are the Legal Risks to Cryptocurrency Investors?

Along with the explosion of interest in cryptocurrency, there is a growing need for clarity regarding the legal implications of these new currencies and the technologies that drive them. Regulatory agencies, tax authorities, and central banks around the world all are working to understand the nature and meaning of digital currencies. Meanwhile, individual investors can make a great deal of money investing in them, but they also assume certain legal risks when they buy and sell cryptocurrencies.

Much of the murkiness of the legal standing of cryptocurrency is due to its newness relative to more traditional currency and payment systems.

KEY TAKEAWAYS

• The regulation of cryptocurrencies remains in an unsettled state.
• The wise cryptocurrency investor should consider reporting their holdings as foreign assets, although the requirements remain unclear.
• One fact is definite: Profits in cryptocurrency trading are taxable as capital gains in the U.S.
• The lack of a centralized authority can be a legal and financial risk to cryptocurrency owners.

10. Why Did Bitcoin Drop 12% This Week?

The price of bitcoin dropped below $26,000 this week amid decreased activity in the market, the growing crisis in China’s property sector, and a report that SpaceX has sold at least some of its bitcoin holdings.

KEY TAKEAWAYS

• The bitcoin price has become susceptible to wilder price swings as trading volumes on exchanges have declined and large trades are able to have a greater impact.
• SpaceX, of which Elon Musk is CEO, reportedly sold at least part of its bitcoin holdings.
• Concerns over the issues with China’s property market leading to a greater economic decline indicate bitcoin may still be viewed as a risk-on asset.

11.Gold vs. Bitcoin: Which Is Better?

Gold vs. Bitcoin: An Overview

Analysts and amateur economists love to sound alarms over a looming recession. The Great Recession of the 2000s was followed a decade later by the COVID-19 recession, one of the shortest in history. The reoccurrence of recessions has renewed the interest investors have in making sure they lose as little as possible if a recession hits.

As an investor, you’d traditionally hold a portion of your portfolio in precious metals like gold. This provides a hedge against the losses stocks can take during a downward economic trend. This has proven effective and still is—but a new alternative is challenging this old-school capital preservation method. Bitcoin is proving to be an interesting asset for investors because it has been around long enough to gain recognition and support—it is even showing a few trends.

KEY TAKEWAYS

• Gold has been an asset that holds value over long periods and is used to hedge against market downturns.
• Bitcoin is young and unproven as an investment, but cryptocurrency speculators are using it to store value and hedge against corrections and recessions.
• Which one is a better investment depends on your risk tolerance, investing goals, strategy, and how much capital you can handle losing.