Today’s Crypto News
1: Bitcoin Steadies at $26,000 but Crypto Traders Are Bracing for Another Storm:
Bitcoin BTCUSD –0.23% and other cryptocurrencies were steadying on Tuesday as investors in digital assets digested a selloff last week that snapped an extended period of uncommonly low volatility. But crypto traders are bracing for yet another storm.
The price of Bitcoin has traded flat over the past 24 hours at around $26,050 after the largest digital asset plunged to near $25,500 in recent trading, revisiting the trough seen in the wake of last week’s selloff tothe lowest level since mid-June. Analysts are eyeing Bitcoin as vulnerable to further declines with thetoken below key technical levels, including its 200-day moving average.
“Next support is already in reach near $25,200,” said Katie Stoctkon, managing partner at technical research firm Fairlead Strategies. “Secondary support is … currently around $20,600.”
Prior to the rout in crypto markets last week, Bitcoin had been in the midst of its lowest volatility in its history—lagging excitement in the stock market, where the Dow Jones Industrial AverageDJIA –0.11% and S&P 500SPX +0.69% have been whipsawing. While violent swings have subsided for now, traders are far from complacent, with pricing in the crypto derivatives market suggesting a surge in careful positioning.
Thailand Warns Meta to Rein In Crypto Scams or Face Expulsion:
Thailand’s Ministry of Digital Economy and Society (DES) has told Meta’s (META) Facebook to curb the number of fraudulent crypto investment scams being advertised on the site, or risk being expelled from the country.
These fraudulent ads have affected more than 200,000 people, according to a statement published on the Ministry’s website. Chaiwut Thanakmanusorn, the Minister in charge of DES has asked a Thai court to prepare an order that would shut down Facebook by the end of the month if the platform doesn’t comply.
Over the course of three years, Facebook (now known as Meta) has gradually eased its restrictions on cryptocurrency and blockchain-related advertisements, CoinDesk has previously reported, broadening thecriteria and accepted regulatory licenses for running such ads.
In March 2022, the company was sued by the Australian Competition and Consumer Commission for allegedly engaging in false, misleading, or deceptive conduct by publishing scam crypto ads linked to prominent Australian celebrities.
2: Bitcoin Looks Most Oversold Since Covid Crash, Key Indicator Suggests:
A technical analysis indicator shows extreme oversold conditions in bitcoin as surging bond yields weigh over risk assets, including cryptocurrencies.
Bitcoin’s 14-day relative strength index (RSI) has dropped well below 30, indicating oversold conditions. The indicator has dropped to its lowest since the coronavirus-induced crash of March 2020.
The RSI is a momentum indicator ranging between 0 to 100 that shows the asset’s recent price movement relative to its average price movement over a specific period, usually 14 days.
A reading below 30 reflects oversold conditions, implying that the price has dropped too quickly relative to its recent average. Meanwhile, a reading above 70 indicates overbought conditions.
One of the mistakes that the crypto community on X (formerly Twitter) and most rookie traders make is to consider oversold and overbought readings as advance hints of an impending bullish and bearish reversal.
But that’s not the case. An oversold RSI reading means prices have dropped too quickly – that’s it, while overbought reading indicates prices have rallied fast.
If anything, the latest below-30 or oversold reading on the RSI is a sign of strengthening bearish momentum. As the old saying goes, indicators can stay oversold longer than dip buyers can stay solvent.
According to Alex Kuptsikevich, senior market analyst at the FxPro, bitcoin’s trend has shifted bearish.
“Bitcoin closed the [last] week with a notable drop below its 200-week and 200-day moving averages, signaling a shift to a bearish trend. From current levels near $26,000, the following area of decline appears to be the last pivot area at $24,700,” Kuptsikevich said in an email.
Bitcoin changed hands at $26,000 at press time. Prices fell over 10% last week as the yield on the 10-year U.S. inflation-indexed security nearly rose to 2%, hitting the highest since 2009.
3: U.S. retail traders eye a fresh piece of the crypto derivatives pie:
Reuters) – America’s mom and pop bitcoin buffs have a shiny new derivatives playground that cryptocurrency analysts hope will fire up a moribund market.
Their new platform is cryptocurrency exchange Coinbase Global, which on Aug. 16 became the first crypto-focused firm to win approval to offer cryptocurrency futures to U.S. retail customers.
It’s early days. But crypto markets are excited by the possibility that the first regulated and listed crypto firm to offer futures trading to U.S. retail investors might revive a shrinking $2 trillion cryptocurrency derivatives market.
“Coinbase’s approval to offer U.S. futures has the potential to rekindle hope and momentum in the market,” said Lucas Kiely, chief investment officer of digital investment platform Yield App.
Hope and momentum are in short supply in a market that has seen bitcoin languish for months as hawkish global central banks and troubles at crypto exchanges such as FTX and Binance sapped interest in volatile crypto assets.
Coinbase’s announcement also comes at a time when derivatives’ trading volumes have shrunk significantly owing to economic uncertainty, continued regulatory hurdles and low volatility that left investors disinclined to make big bets.
Retail traders in the United States can trade bitcoin directly on licensed exchanges such as Bitstamp and Coinbase. They can trade options on the CME, but only through a broker. Or, they can invest in bitcoin exchange-traded funds (ETFs) issued by fund managers such as ProShares and VanEck.
That is why Coinbase’s new offering is creating a buzz. A rush of retail traders, famed for their manic meme-stock trading roused on social media sites such as Reddit, could change things in the crypto world.
Todd Groth, head of index research at CoinDesk Indices, says it is too early to gauge the impact of the launch. “It remains to be seen how Coinbase structures these products,” he said.
DROP IN DERIVATIVES
Derivatives such as options and futures have dominated cryptocurrency trading since such products appeared around 2014, as investors snapped up the opportunity to place bets on bitcoin’s price moves with minimal investment.
They are also heavily favored by institutional investors, whose interest has remained fairly steady this year, with the number of Large Open Interest Holders – those holding more than 25 contracts – in CME bitcoin futures up 5% since the second quarter, according to the exchange’s data.
The dominance of options trading is often cited as a reason for cryptocurrency’s trademark volatility, with investors taking on heavily leveraged bets that can reward them for both gains and losses.
Yet, trading volumes in derivatives decreased by nearly 13% in July to $1.85 trillion, the lowest monthly volume since December 2022 and second lowest derivatives trading volumes since 2021, research firm CCData reported.
Derivatives are big business in crypto markets. Derivatives made up 78.2% of the total cryptocurrency trading volume on centralized exchanges in July, CCData reported.
In the second quarter of 2023, derivatives volume was six times larger than spot volume even as overall volumes fell, according to Kaiko Research.
Spot cryptocurrency trading volumes also fell 10.5% to $515 billion in the same period, CCData showed.
“For now, the derivative market is dominated by offshore exchanges, mainly Binance,” said Dessislava Aubert, an analyst at Kaiko.
“But we have seen its dominance decline this year. This essentially means that there is potential for growth in derivatives trading. In particular, Coinbase could leverage its strong reputation and attract institutional clients.”
4: From stocks to bitcoin, soaring US yields cast shadow over risk asset rally:
Surging U.S. Treasury yields are sending shudders through riskier areas of the market, leaving investors to wonder how badly it will dent a rally that has lifted everything from stocks to bitcoin this year.
Strong economic growth has spurred expectations that the Federal Reserve will leave rates higher for longer, pushing Treasury yields this month to their highest levels since 2007. That climb has made them harder to ignore for holders of stocks and other speculative assets, which have rallied for most of the year even as yields moved steadily higher.
The S&P 500 has lost 4% this month as the U.S. benchmark 10-year Treasury yield climbed to a more than 15-year high of 4.366% on Tuesday. Meanwhile, the S&P 500 technology sector has dropped 5.7%, bitcoin has fallen over 10% and the ARK Innovation ETF – a bastion of many high-growth names – has dropped 18.5%. Stocks rose on Monday, with the S&P 500 closing up 0.7% and futures pointed to a further rise on Tuesday.
Higher Treasury yields – which move inversely to bond prices – can take the shine off speculative assets by offering investors attractive payouts on an investment seen as basically risk free because it is backed by the U.S. government. Rising rates also increase the cost of capital throughout the economy, making it more difficult for everyone from individuals to companies to service debt.
“The day of reckoning is here” for assets such as cryptocurrencies and smaller cap growth companies that burned through cash, said Sameer Samana, senior global markets strategist for Wells Fargo Investment Institute.
“The biggest, clearest market theme for the next six months at least is to favor the parts of the market that are the least reliant on borrowing and credit,” added Samana, who has unfavorable ratings on small caps, emerging markets, REITS, and consumer discretionary stocks.
A crucial test for markets comes later in the week with the annual gathering of central bankers in Jackson Hole, Wyoming. Fed Chair Jerome Powell is due to deliver a talk on the economic outlook on Friday.
Investors are realizing that “rates are not going to go back down as quickly as they thought,” said Matt Maley, chief market strategist at Miller Tabak. “It is causing them to rethink their strategies.”
U.S. investors were net sellers of equity funds for a third consecutive week in the seven days to August 16, according to the latest weekly data from Refinitiv Lipper. At the same time, they have been drawn by high yields in money market funds, pouring in some $32.5 billion over the past week, the biggest inflow since July 5.
Investor equity positioning, as measured by Deutsche Bank, dropped for a fourth straight week to a two-month low.
But betting against stocks has been a losing trade this year. Many investors believe equities will hold strong in a year that has seen them rebound from widespread recession fears and a banking sector upheaval. The S&P 500 is up 14.6% year-to-date.
Goldman Sachs strategists on Monday said equity holdings by retail and institutional investors stand below their historic norms, suggesting there may be additional fuel left to power the bull market if the economy stays strong.
“Should the U.S. economy continue on its path to a soft landing, we believe the recent decrease in (equity exposure) will be short-lived,” the firm’s strategists wrote.
Randy Frederick, managing director of trading and derivatives for the Schwab Cen
ter for Financial Research, believes S&P 500 earnings likely hit their trough in the second quarter and will expand in the third quarter, pushing the index to a record high by year end. The S&P 500 is over 8% below its January 2022 closing high.
“The era of low rates is gone and new companies that are managing a lot of debt that has to be rolled over at higher rates will struggle,” Frederick said. “But we think this is a temporary lull for the market overall.”
5: SEC Charges Titan Crypto Investment Firm for Misleading 2,700% Annualized Returns Advertising Claims:
The SEC Discovered That Titan Crypto Investment Firm Failed To Establish Suitable Employee Trading Practices
The Securities and Exchange Commission (SEC) has charged Titan Global Capital Management, a fintech investment manager, in a series of allegations relating to advertising and compliance violations.
The SEC said that the New York-based company’s website contained false statements about “hypothetical performance,” in violation of the SEC’s revised marketing rule, which took effect from December 2020.
Based on three weeks of data since its August 2021 launch, Titan had claimed that its Titan Crypto product would return up to 2,700% annualized. The SEC discovered that the company failed to establish suitable employee trading practices prior to October 2022 and made ambiguous claims concerning the custody of cryptocurrency assets and other policies.
Titan Global Capital Management, a company registered with the SEC and a participant in the Financial Industry Regulatory Authority, has accepted a cease-and-desist order, a censure and fines. Titan has self-reported some of the problems and assisted the inquiry.
Without acknowledging or rejecting the findings, they consented to the SEC order. The SEC’s actions included a $850,000 penalty that would be given to the harmed clients and a disgorgement of ill-gotten gains of $192,454 with interest.
Senior SEC enforcement officer Osman Nawaz stressed that the action should serve as a reminder to all advisers to ensure compliance.
6: FBI Seized Over $1.7M in Crypto Assets Between March to July 2023:
The FBI’s Continued Attempts To Target Suspected Illegal Activity Inside The Digital Asset Ecosystem
The Federal Bureau of Investigation (FBI) recently reported that between March and July of this year, the agency had seized cryptocurrencies worth over $1.7 million owing to violations of federal law. According to the notice, the FBI had taken these assets for federal forfeiture purposes.
The majority of the seized money, or about $800,000, was in the form of Ethereum (ETH). The Eastern District of Virginia saw the largest seizure, as $463,811 worth of ETH was seized. Out of all the states in the United States, Florida and Virginia had the most crypto assets seized.
Stablecoins were also included in the confiscated assets; in one case, DAI worth $469,000 was seized in the Eastern District of Virginia. There were eight occurrences of USDT (Tether) seizures documented, however there were none for USDC (USD Coin).
The FBI’s seizure included other cryptocurrencies as well, such as $147,000 worth of Bitcoin and $20,000 worth of Monero. Additional tokens like Solana and Cardano were also among the listed confiscated assets.
It’s interesting to note that meme-based cryptocurrencies, including $200 worth of Dogecoin, made it into the seized collection. The FBI’s continued attempts to target suspected illegal activity inside the digital asset ecosystem are reflected in the collection of numerous cryptocurrencies.
7: Bitcoin recovers after falling below $26,000 as the ETF excitement bubble bursts:
Bitcoin stabilized Tuesday morning in Asia after dropping below the key US$26,000 support level overnight. Ether also dipped but held the US$1,600 mark. All other top 10 non-stablecoin cryptocurrencies traded flat to lower, with Polygon’s Matic leading the losers. Alternative asset manager CoinShares reported a US$55 million outflow in digital asset investment products last week. Analysts say disappointment from the stalemate on U.S. Bitcoin exchange-traded fund (ETF) applications has impacted sentiment. Meanwhile, the Forkast 500 NFT index continued its downward slide in the wake of NFT marketplace OpenSea’s decision to stop enforcing creator royalties. U.S. stock futures traded lower after Wall Street closed mixed on Monday.
8: Judge Backs U.S. Sanctions on Crypto Platform Tornado Cash:
Sanctions imposed last year by the U.S. Treasury Department against decentralized cryptocurrency platform Tornado Cash are here to stay, according to a recent ruling by a federal judge.
Six individuals filed a civil lawsuit in the U.S. District Court in Austin, Texas, last September against the Treasury Department and its leaders, alleging the designations against Tornado Cash exceeded the department’s legal authority over foreign nationals’ interests in property and violated the First Amendment.
The suit was financed by crypto exchange Coinbase Global in an effort to defend privacy in crypto, its chief executive Brian Armstrong said at the time.
Tornado Cash, a platform that enables users to exchange cryptocurrencies with relative anonymity, was sanctioned by the U.S. Treasury last August. The U.S. accused it of laundering billions of dollars in virtual currency, including $455 million that was allegedly stolen by North Korean hackers.
In November, the Treasury rescinded its original blacklisting and redesignated the platform for having materially assisted the North Korean government and its role in “enabling malicious cyber activities” by North Korea, saying that the redesignation took into account additional information.
The Coinbase-backed suit centered on the characterizations of Tornado Cash, according to the order written by U.S. District Judge Robert Pitman that was
filed last Thursday. The plaintiffs argued, “Tornado Cash is a decentralized, open-source software project comprised of a subset of smart contracts” on the Ethereum blockchain, while the government contended the platform was “an organization that runs a cryptocurrency mixing service,” the judge wrote.
Judge Pitman determined that Tornado Cash is an entity that may be designated by U.S. sanctions laws as it is composed of its founders and developers, as well as its decentralized autonomous organization, or DAO, a management structure that allows the holders of governance tokens to vote on decisions.
The judge rejected the plaintiffs’ arguments and agreed with the government that Tornado Cash’s smart contracts constitute property and the company has a beneficial interest in the smart contracts as they provide a way for Tornado Cash to control and use crypto assets.
“Furthermore, unlike abstract ideas, deployed smart contracts convey an ongoing benefit for Tornado Cash, in the form of fees transmitted to the DAO. Tornado Cash has a property interest in this ongoing benefit,” the judge wrote.
The judge said the plaintiffs also hadn’t shown that the government’s action violates the First Amendment.
“We are pleased with the Texas District Court’s opinion upholding Treasury’s vital work protecting U.S. national security. At a time when North Korea is increasing its reliance on virtual currency heists and other cybercrime, it’s critical to continue disrupting the regime’s ability to generate revenue for its ballistic missiles and weapons of mass destruction programs,” a U.S. Treasury spokeswoman said in a statement Friday.
9:Bitcoin Bulls Mull the Meaning of New Fed Messaging on Inflation and Interest Rates:
Bitcoin suffered one of its more dramatic declines ever last Thursday at least in part thanks to the realization that a strengthening economy means interest rates are likely to stay on the rise.
Consumer spending and new home sales data for July both came in stronger than expected last week, prompting the Atlanta Fed’s GDPNow tool to up its forecast to very speedy 5.8% GDP growth in the third quarter (July-Aug-Sept).
Those sorts of numbers are typically just seen coming out of recessions and the only time the U.S. has experienced such fast growth in the last decade was in a few of the quarters following the Covid lockdown-induced economic collapse.
Stuck in a tight range roughly between $29,000 and $30,000 for several weeks, bitcoin (BTC) Thursday afternoon dropped to the low $28,000 area thanks to the economic news. That, in turn, triggered a chain of stops and liquidations that sent bitcoin quickly plunging below $25,000. A very modest recovery since has brought the price back to $26,000 at press time.
The crypto world wants to know why Vitalik Buterin just deposited $1 million in Ether with Coinbase:
Ethereum cofounder Vitalik Buterin sparked a flurry of online speculation on Monday after sending 600 Ether, about $1 million worth, to the crypto exchange Coinbase.
The 29-year-old sent the funds from his publicly labeled address, vitalik.eth, according to Etherscan. The transfer comes as Ether has dropped more than 10% over the past week. On Monday, it was trading down about 0.35%, near $1,600.
X, formerly Twitter, was filled with theories regarding Buterin’s transfer, with some saying he was paying off a debt while others were claiming that he was looking to dump the coin before it fell further.
Some also speculated the transfer may have something to do with Coinbase’s new layer-2 blockchain, Base, which is built on top of the Ethereum blockchain. The network officially launched earlier this month, and Coinbase has tried to attract users and developers through a multi-week “Onchain Summer” Web3 festival that includes brand partnerships, NFT mints, and 100 Ether in grants designated for developers seeking to build on the chain.
Imperial College London and FluidAI Partner to Tackle Crypto Market’s Liquidity Crunch:
10: Partnership aims to enhance efficiency of tokenized markets for wide range of cryptocurrency stakeholders
FluidAI, the fintech making tokenized market access more efficient for institutions, trading platforms, and retail investors, has announced a groundbreaking partnership with I-X, Imperial College London’s artificial intelligence (AI) initiative. It marks the world’s first-known AI partnership at a globally renowned university to be partially funded by cryptocurrency. Together, FluidAI and I-X will work to solve some of the biggest inefficiencies in digital asset markets such as fragmented liquidity.
Crypto markets currently suffer from numerous problems stemming from a lack and fragmentation of liquidity, including high volatility, price slippage, vulnerability to market manipulation, and flash crashes, unlike traditional markets like equities, that have sophisticated infrastructures and settlement systems in place.
“Liquidity aggregation in crypto is a global financial challenge and it spurred the founding of FluidAI, and partnering with Imperial is a continuation of our endeavours to help the industry evolve through research and development in areas that require focus such as AI,” said Ahmed Ismail, Co-founder, President, and CEO of FluidAI.
“We are delighted to partner with I-X, Imperial College London’s groundbreaking AI initiative on this highly strategic and impactful project that is a global first and one that will help solve what is one of the biggest problems in the crypto industry,” he added.
Imperial College London is the UK’s #3 ranked university, and has risen to 10th in the world in the latest Times Higher Education World University rankings. In March of 2021 it launched I-X, an academy strategy project that provides a co-located collaborative environment for research, education, and entrepreneurship across AI, data science, and digital technologies. As one of the world’s foremost public research universities, Imperial plays a leading global role in the development of AI, machine learning, advanced robotics, and augmented and virtual reality. It also houses the Centre for Cryptocurrency Research and Engineering, with the aim of becoming a leading international centre for research and application activity related to cryptocurrency and blockchain technology.
