1. Market Wrap: Bitcoin Rally Expected to Pause
Analysts expect traders to take a breather after the crypto’s recent rally.
Bitcoin traded in a choppy range on Monday as buyers appear to be exhausted ahead of the $50,000 resistance level. The cryptocurrency was trading at around $46,000 at press time and is roughly flat over the past 24 hours.
On Monday, the total crypto market cap surpassed $2 trillion for the first time since mid-May, according to CoinMarketCap data. Ether and cardano are standouts in the recent crypto rally, with strong rallies month to date, rising 26% and 62% respectively, compared with a 16% rise in bitcoin during the same period. XRP is also up 70% so far this month.
The rapid rise in crypto prices has some analysts expecting a pause. Katie Stockton, managing director of Fairlead Strategies, highlighted signs of upside exhaustion in bitcoin in her Monday newsletter.
Upside exhaustion signals could “support a brief period of consolidation as gains are digested and short-term overbought conditions are relieved,” Stockton wrote.
“Even though the trend has flipped bullish, a pullback is to be expected before continuation. This is because there has been declining volume with an increase in price,” Marcus Sotiriou, a trader at the U.K.-based digital-asset broker GlobalBlock told.
Bitcoin (BTC) $45867, -1.1%
Ether (ETH) $3156.3, -1.6%
S&P 500: $4479.7, +0.26%
Gold: $1787.9, +0.45%
10-year Treasury yield closed at 1.27%, compared with 1.29% on Friday.
Bitcoin mining reserves rise
Bitcoin miners have added more of the cryptocurrency to their reserves in the past few weeks.
“The reserves are now close to this year’s all-time high of May 9, recovering the outflows in June,” Jan Wuestenfeld, an analyst at blockchain analysis firm CryptoQuant, wrote in a blog post.
Miners “appear to be unimpressed by the most recent price moves (likely expecting higher prices),” Wuestenfeld wrote. “The fact that miners are not under pressure to sell their BTC at these prices is a testament to the health and resilience of the miners and the network.”
2. Poly Network Hack Not Over as Attacker Prolongs Return of Funds
The attacker now says they are considering accepting the $500,000 bounty offered by Poly Network as a reward for returning the funds, and using it to pay anyone else who can hack the DeFi site.
The Poly Network cyberattack saga has dragged into its second week with the hacker or hackers yet to provide the key for the multi-signature wallet needed to complete the full return of the roughly $600 million that was stolen, with the exception of the $33 million worth of the stablecoin USDT (+0.01%) that was frozen by Tether.
China-based Poly Network had previously offered $500,000 to the attacker or attackers as a reward for returning the money taken on the Binance Smart Chain (BSC), Ethereum and Polygon platforms in what is likely the largest-ever hack of a decentralized finance (DeFi) site.
The hack or hackers acknowledged receiving the offer and initially said they had declined it, but had instead begun (and eventually completed) returning the stolen funds to a multi-signature wallet set up by Poly Network. The hacker or hackers haven’t turned over the final key for the wallet, though.
In a message posted to the Ethereum blockchain at 1:45 p.m. UTC on Monday, the attacker, who the Poly Network is calling “Mr. White Hat” but who some others doubt is a true white hat hacker, said that they were considering taking the bounty and using it to reward anyone else who can hack the cross-chain platform. A “white hat” attacker is one who tries to exploit vulnerabilities in a protocol to help expose and ultimately fix bugs or loopholes in the underlying code.
“MONEY MEANS LITTLE TO ME, SOME PEOPLE ARE PAID TO HACK, I WOULD RATHER PAY FOR THE FUN,” the attacker or attackers wrote. “IF THE POLY DON’T GIVE THE IMAGINARY BOUNTY, AS EVERYBODY EXPECTS, I HAVE WELL ENOUGH BUDGET TO LET THE SHOW GO ON.”
“I TRUST SOME OF THEIR CODE, I WOULD PRAISE THE OVERALL DESIGN OF THE PROJECT, BUT I NEVER TRUST THE WHOLE POLY TEAM,” the attacker added.
“I WILL PROVIDE THE FINAL KEY WHEN _EVERYONE_ IS READY. MY IDEA IS NOT CHANGED, BUT I DO WORRY IT MIGHT BE AN ENDLESS WAR. SO I MIGHT RELEASE IT EARLIER AS LONG IF THE COMMUNITY UNDERSTANDS EVERYTHING.”
3. Bitfarms Increases Revenues by Almost 400% in Q2
The crackdown on crypto mining in China has helped the results and outlook for the Canadian bitcoin mining firm.
Canada-based bitcoin (BTC, -1.98%) mining company Bitfarms reported Monday that its sales grew 396% year-over-year to $36.7 million in the second quarter. It recorded an operating loss of $2.1 million and a net loss of $3.7 million for the quarter.
Shares of Bitfarms were up 0.5% to $6.42 in after-hours trading on Monday following the release of its earnings. Shares are up almost 240% year to date as China has cracked down on crypto mining and the price of bitcoin has increased significantly.
The company mined 759 bitcoin in Q2 with an average cost of approximately $9,000 per Bitcoin, and held 1,293 bitcoin valued at $35,057 each, or approximately $45.3 million, as of June 30, 2021.
Bitfarms’ average cost of production per bitcoin to $9,000 for the quarter compared to $5,075 for the prior year quarter reflected the May 2020 halving event and expenses related to third-party hosting, offset by the benefit from operating efficiencies.
“The second quarter of 2021 was a pivotal one for our company,” said Emiliano Grodzki, Bitfarms’ CEO. “From the beginning of 2021 through the end of 2022, we expect to have increased our capacity eight- fold and have expanded our geographic resources throughout North and South America while continuing to pursue opportunities elsewhere.”
Grodzki added that “further, while the price of Bitcoin continues to fluctuate, the current market is favorable to our global operation with the ban on crypto mining in China and the resultant shutdown of almost one-half of the network hash rate, allowing us to increase our market share to just above 1.5% from less than 1.0% at the beginning of the year.”
4. Congressmen McHenry, Thompson Call SEC Chair Gensler’s Remarks on Crypto ‘Concerning’
The two congressmen wrote that rather than potentially regulating innovation and job creation out of the U.S., lawmakers and regulators should “promote an active dialogue between regulators and market participants.”
Reps. Patrick McHenry (R-N.C.) and Glenn Thompson (R-Pa.) said Securities and Exchange Commission Chair Gary Gensler’s recent comments on increasing crypto regulation, and a letter Gensler sent Sen. Elizabeth Warren (D-Mass.) that the SEC needs more authority to regulate cryptocurrency, provide a “concerning roadmap for regulatory actions that will have long-term implications.”
In an open letter to Gensler and acting Commodity Futures Trading Commission Chairman Rostin Behnam, the congressmen said that “rather than regulate innovation and job creation out of this country, we should promote an active dialogue between regulators and market participants.” The two noted that this is the goal of H.R. 1602, the Eliminate Barriers to Innovation Act of 2021, which passed the U.S. House of Representatives in April.
The 2021 act requires the SEC and the CFTC to establish a joint Working Group on Digital Assets with market participants, organizations involved in academic research and investor protection organizations, among others.
The two said that lawmakers and regulators should work together to balance protecting innovation with any new regulations to “ensure the digital asset marketplace flourishes in the United States.”
They called on Gensler, Behnam and their fellow commissioners to provide details on how the SEC and CFTC plan to work together on these issues.
5. Solana, Terra Hit All-Time Highs as Markets Disregard Last Week’s DeFi Hacks
“Crypto natives have proven to be very resilient,” one analyst said.
Prices for Solana’s SOL and Terra’s LUNA tokens hit all-time highs on Monday, as the total market capitalization of cryptocurrency broke $2 trillion for the first time since May.
The price rally for the tokens representing two projects that are built for the decentralized finance (DeFi) sector shows that investors remain confident about the industry, especially in layer 1 protocols, despite security risks that were exposed by the biggest DeFi hack ever in monetary value last week.
Solana, the native token of Solana, a public blockchain that is backed by Sam Bankman-Fried, the founder of crypto exchange FTX, logged a record high price Monday of $69, according to data from FTX and TradingView.
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August 17, 2021