1. Market Wrap: Bitcoin Returns to Above $46K Even as Indicator Shows Crypto Fear
Bitcoin is in recovery mode as the Fear & Greed Index enters the fear zone; analysts eye regulatory developments.
Cryptocurrencies were mostly higher Tuesday as U.S. Securities and Exchange Commission (SEC) Chairman Gary Gensler broadened his pitch for greater regulatory oversight of crypto markets. Bitcoin displayed little reaction to Gensler’s testimony to the U.S. Senate Committee on Banking, Housing and Urban Affairs, and was up about 5% over the past 24 hours.
Gensler also warned that crypto exchanges like Coinbase should register with the SEC. “They haven’t yet registered with us, even though they have dozens of tokens that may be securities,” Gensler said.
As the SEC pushes Congress for more resources to regulate different crypto projects, large institutional investors are taking note.
“The institutionalization of digital assets means that cryptocurrencies will become more ingrained within the U.S. financial landscape,” Fitch Ratings wrote in a Tuesday report.
“The degree of clarity of regulatory guidance and oversight for digital assets is an important consideration when assessing credit implications for banks entering the space,” Fitch wrote.
Traditional banks are indirectly involved in the crypto industry by providing deposit and lending products to digital asset market participants, which could raise several compliance risks, according to Fitch. There are also client suitability, money laundering and cybersecurity concerns that need to be addressed for institutional investors to embrace cryptocurrencies at scale.
Latest Prices
Bitcoin (BTC), $46,475, +3.8%
Ether (ETH), $3,351, +3.0%
S&P 500: -0.6%
Gold: $1,805, +0.7%
10-year Treasury yield: 1.277%, -0.047 percentage point
Indicator shows crypto market in fear mode
Bitcoin’s Fear & Greed Index moved sharply into “fear” territory after the crypto sell-off last week.
“For much of August, the market was in a state of extreme greed as prices rose across the board,” Joo Kian, a research analyst at Delphi Digital, wrote in a blog post. “September tends to be a negative month for crypto as a whole. While the month kicked off strong, sentiment has deteriorated rather quickly.”
Previous episodes of negative sentiment preceded price rises similar to last September and this July, as shown in the chart below.
2. Christie’s Lists Rare CryptoPunk, Bored Ape in Major NFT Auction
Demand for NFT-style avatars is driving collector interest, says Christie’s.
Christie’s will begin bidding on a rare zombie CryptoPunk non-fungible token (NFT) on Friday.
The No Time Like Present online auction, which runs Sept.17 through Sept. 28, will feature several hot NFTs, the crown jewel of which is Larva Labs’ CryptoPunk #9997, a red-eyed, bearded zombie wearing a black cap.
The auction will also include Bored Ape Yacht Club (BAYC) #8746, a cheetah-furred ape with a halo and laser eyes, and Larva Labs’ Meebit #6337, a skull-headed figurine with Lego-like limbs.
The pieces are part of the private collection of Shawn Yue, who says he started dabbling in NFTs earlier this year.
“This [idea for the auction] came across my mind as I am celebrating [my] 40th birthday this year…It is time to mark another new chapter of my life,” Yue told. “A lot of my friends have started collecting NFTs for a few years, and I have learned quite a lot [about] this new category from them.”
Christie’s told CoinDesk that it has seen “surging” demand for avatar projects such as CryptoPunks and Yuga Labs’ BAYC.
“Owners of these works like to use the avatars they bought as their profile pictures — you can say that these figures become their virtual persona, and owning one of the rare punks thus also becomes a status symbol,” said Laura Shao, an associate specialist of 20th & 21st century art for Christie’s Asia Pacific.
According to Larva Labs’ website, CryptoPunk #9997 was last sold in February for 99.99 ETH, equivalent to $169,770 at the time. The punk was later offered for sale in May at 450 ETH, or $1.48 million, before the offer was withdrawn in July.
Recent sales of CryptoPunks with the rare “zombie” attribute have fetched prices as high as 2,000 ETH, or $6.7 million.
3. Fidelity Prodded SEC to Approve Bitcoin ETF in Private Meeting
The firm pushed the agency, citing increased investor interest and a growing number of bitcoin holders.
Fidelity Investments privately prodded the U.S. Securities and Exchange Commission (SEC) last week to approve its bitcoin exchange-traded fund (ETF), according to recent filings.
The multinational, financial services giant urged the regulator to approve its fund by citing increased investor interest in crypto. Fidelity also pointed to the rising number of investors holding bitcoin and similar funds worldwide. Bloomberg first reported the news Tuesday.
Fidelity Digital Assets President Tom Jessop, among other executives from the firm, met with SEC officials via a Sept. 8 video call.
Bitcoin ETFs in the U.S. have had a notoriously hard time winning SEC approval of their applications. Presently, there are over 10 applications pending, including those by VanEck, WisdomTree, and more recently, Anthony Scarammuci’s SkyBridge.
The firm originally filed its Wise Origin Bitcoin Trust in March with a follow-up response in June. Last week marked the second round of talks between the SEC and Fidelity, and like all others, the application is pending.
Purpose Investments became the first in North America to be approved for a bitcoin ETF when Canadian regulators gave their go-ahead in February.
4. Solana Validators Plan Network ‘Restart’ as Outage Continues
Solana developers have decided to restart the network after over seven hours of downtime.
Solana node operators are coordinating a “restart” of the high-speed blockchain Tuesday in an attempt to bring the stuttering network back online.
“The validator community elected to coordinate a restart of the network” and is preparing a “new release” that will right the frozen blockchain, according to an afternoon tweet from the Solana Foundation.
In Solana’s Discord server, developers distributed restart instructions at 3:21 p.m. Eastern time.
The outage began early Tuesday after “resource exhaustion” on the network brought blockchain validation to an hours-long halt. On-chain activity froze across Solana’s multibillion-dollar ecosystem of trading, staking and lending projects.
A source familiar with the matter told CoinDesk that the outage “impacts everything built on Solana, but the issue is the underlying [layer 1].”
Tuesday’s outage came amid booming interest in Solana, a network seeking to attract Wall Street usage whose token has been on fire since late August. Investors have flocked to Solana as a low-fee platform for decentralized finance (DeFi).
The disruption was caused by bot trading of Grape Protocol’s Tuesday token offering, founder Anatoly Yakovenko said on Twitter. It is the second time in two weeks that Solana’s mainnet cluster experienced “instability,” according to a Messari research note reviewed.
A flood of transactions pushed the network past its limits early Tuesday, Solana’s status account tweeted shortly after 3 p.m. Eastern time. The activity triggered a forking that knocked multiple nodes offline. Engineers tried and failed to triage the problem, according to Solana.
It’s not unheard of for blockchain networks to experience service disruptions. Solana’s mainnet is still in beta mode; it last experienced an outage in December, another source said. Last week’s hiccup was also related to a resource exhaustion event.
“It’s good for people to understand that Solana mainnet is still clearly in beta,” said a source building one of Solana’s popular DeFi protocols interrupted by the outage. “I have faith in the Solana core contributors and validators to resolve this issue promptly.”
Engineers were rushing to push a patch to Solana node runners, multiple sources told us. Once it’s ready and running across 66% of validators (a supermajority on the network) Solana is expected to come back online.
Until then, the ecosystem with over $11 billion in total value locked (TVL) is in wait-and-see mode. Activity remains frozen at block #96538485.
It is unclear what implications the Tuesday outage may have for Solana. One source in the developer community pointed out that some projects have time-sensitive operations, like liquidations and IDO launches. Those could become thorny the longer the network remains down.
5. Square Joins Open Invitation Network to Limit Cryptocurrency Litigation
The network asks its members to pledge royalty-free access to patents for open source technology.
Square has joined the Open Invention Network (OIN), a global patent non-aggression consortium, the payment giant announced Tuesday.
The OIN, originally created to protect the Linux operating system from patent litigation, reduces patent lawsuits over cryptocurrencies by having its members pledge royalty-free access to patents for open source technology.
The idea is to avoid extended legal battles over the core technologies that underlie the new digital currencies, Max Sills, counsel at Square, told Bloomberg. This includes technologies such as the Linux kernel and hadoop.
Square last year created the Crypto Open Patent Alliance (COPA), in which members pledge not to sue each other specifically over crypto technology patents, except for defensive purposes.
Square has become extremely involved with bitcoin, adding hundreds of millions of dollars the cryptocurrency to its balance sheet, as well as offering its customers the ability to buy and sell bitcoin.
Square CEO Jack Dorsey recently previewed plans to build a decentralized bitcoin exchange, and has also indicated that Square is building its own bitcoin hardware wallet.
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September 15, 2021
