11 Aug 2023

Hello there,

The past three months have been mixed; Bitcoin is essentially trading in the same consolidation zone above $29,000. It has to break either way – we want it soon enough, we love the volatility, don’t we? Right now, BTC is dancing in its comfort zone with no perceptible change.

Meanwhile, Curve Finance’s exploit to the tune of $60 million is the focus this week. We have been here before – exploits in crypto have become commonplace. Today, we cover security concerns that plague decentralized exchanges (DEXs) like Curve and what you, as an end user, can do to mitigate exposure.

August is traditionally a dull month for crypto. Even as US CPI came in line with expectations today, the market isn’t excited yet. However, there are some trends we are observing that can play out over the next few months. These include the emergence of institutional stablecoins, reduction in BTC volatility and a strong holding pattern.

Let’s jump in.

Top-3 stories of the week:

1

After losing its case against Ripple Labs, the SEC is now requesting an uncommon interlocutory appeal. The appeal is primarily focused on the previous ruling that deemed Ripple XRP token’s programmatic sales were not securities. The SEC argues that an interlocutory review would prevent potential lengthy processes in the ongoing case. Ripple Labs is set to respond to the SEC’s request next week.

2

Billionaire David Rubenstein, co-founder of The Carlyle Group, expressed regret for not investing in Bitcoin earlier and emphasized that he thinks it’s here to stay, highlighting interest from major firms like BlackRock.

3

Coinbase has filed an official motion to dismiss the lawsuit brought against it by the SEC, arguing that it doesn't trade securities, making the SEC's charges irrelevant. For context, The SEC has accused the crypto exchange of operating as an unregistered broker and selling unregistered securities through its staking-as-a-service program. Through all of this, Coinbase’s chief legal officer asserts that the SEC has overstepped its authority.

The newsletter is put together by Giottus Crypto Platform and The News Minute’s Brand Studio. You can read all the previous issues of Cryptogram here.

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WEEKLY MACROS

• Total crypto market cap - $1.17 trillion - UP 0.8%

• Bitcoin price - $29,390 - UP 0.8%

• The dollar index (DXY) - 102.58 - UP 0.1%

• Bitcoin Dominance - 50.45% - UP 0.3%

• Crypto Fear and Greed Index - 51 - the market is in neutral state

ICO CALENDAR

• 18^th August - SOLIDUS AI TECH ($AITECH)

THE HOT TAKE

Key Crypto Trends in August 2023

The launch of PYUSD, a new stablecoin by PayPal, is the most exciting event of this month. Is this a start of wider institutional adoption in the space? Given stablecoins enable an investor to keep dormant cash within the system or to use as a medium of transaction, their importance and value have grown multi-fold over the years. Governments hate them and are floating ideas of their own CBDCs as an alternative. This and other trends to watch out for below.

1. PayPal wants a share of the pie

On August 7, PayPal, a major payments platform, launched a stable coin (PYUSD) that is pegged to the US dollar. PYUSD is supported by short-term treasuries, dollar deposits, and cash equivalents, as detailed in the company's announcement, and will be minted on the Ethereum network as an ERC-20 token. Starting from September, Paxos, a blockchain-based payments company, will publish monthly reports detailing the reserves backing PYUSD. PYUSD has already reached 26 million in supply – though it pales in comparison to the ~$110 billion combined market cap of Tether USD and USD Coin, the top two stablecoins currently.

2. Uniswap gets deployed on Coinbase’s Layer-2 Network Base

Uniswap v3 has now launched on Coinbase’s L2 Base. Since the launch, Uniswap has already executed more than 13,770 transactions and around $8.2 million in trading volume. The Base network, an L2 blockchain recently launched to the public, has had almost $140 million bridged and generated over $1.6 million in fees.

With this launch, both Uniswap and SushiSwap, the two main DEXs on Ethereum, are now available on Base, giving US investors more platforms to trade assets. Coinbase, which is fighting the US SEC on listing certain crypto assets termed as securities, continues to be bullish about the space.

3. Global stocks are on the brink of a downturn

Global stocks are experiencing a downturn due to concerns about the financial system and economy, influenced by recent developments in China, Italy, and the US. Moody’s has downgraded 10 smaller US banks and hinted at potential downgrades for some major institutions. This comes as Italy introduced a new tax that has wiped €9.3 billion from its banks’ valuation. Meanwhile, disappointing trade data from China has led to a drop in copper prices. Seasonally, September isn’t a great month for stocks or crypto.

4. Long-term BTC holders are accumulating

Long-term Bitcoin holders, defined as addresses that have held coins for at least 155 days, now control a record 75% of BTC’s circulating supply. Data from Glassnode indicates that the balance in these long-term wallets has increased by 62,882 BTC, reaching a new high of 14.52 million BTC. This surpasses the previous peak of 14.48 million BTC recorded in May this year. This suggests an ongoing accumulation phase in the market.

5. BTC volatility is reaching its low

Volatility is determined by the fluctuation in Bitcoin's price relative to its average price. Bitcoin's volatility has now reached its trendline lows, like March 2020. This low volatility is typically seen in post-bear-market hangover periods which are ideally good re-accumulation phases.

6. MVRV Z-Score suggests another dip incoming

MVRV Z-Score uses blockchain analysis to identify periods where Bitcoin is extremely over or undervalued relative to its fair market value. Peaks in the Z-score, especially when entering the pink zone, often indicate a top in market cycles. Conversely, when the Z-score ventures into the green zone, it suggests a prime buying opportunity.

According to the metric, BTC has moved away from the green zone this year but is dipping back directionally. If we revisit the green zone, we can be sure to load up. Till then, cost averaging regularly at these levels will serve us well.

Disclaimer: Crypto-asset or cryptocurrency investments are subject to market risks such as volatility and have no guaranteed returns. Please do your own research before investing and seek independent legal/financial advice if you are unsure about the investments.

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If you have any questions or feedback for us, write to us at [email protected]. You can check out the previous issues here.