Crypto Daily News from ZBG Exchange

1. Market Wrap: Cryptocurrencies Stabilize as Regulatory Concerns Rise

Bitcoin and other cryptocurrencies are rangebound as analysts monitor regulatory developments.

Cryptocurrencies were mostly lower on Friday after a volatile week. The sell-off appears to be stabilizing, although many alternative coins in the CoinDesk 20 are underperforming bitcoin over the past seven days.

Bitcoin was trading around $45,000 at press time and is down about 8% over the past week. Some analysts expect BTC to consolidate with support nearby at the 200-day moving average, although resistance remains strong around the $50,000 price level.

“Tuesday’s liquidations were possibly exacerbated by the leverage embedded in the Ethereum market and the wider altcoin universe,” FundStrat, a global advisory firm, wrote in a newsletter published on Wednesday. “The macro and on-chain (blockchain) pictures remain consistent, and therefore we believe these mid-cycle liquidations are good opportunities to consolidate positions.”

Analysts and traders are also monitoring regulatory risk, which could damp sentiment in the crypto market.

Latest Prices

Bitcoin (BTC): $45,701, -1.2%

Ether (ETH): $3,326, -3.2%

S&P 500: -0.8%

Gold: $1,797, +0.3%

10-year Treasury yield closed at 1.339%

Regulatory concerns

Recent headlines suggest the global regulatory crackdown on cryptocurrencies is not over. On Thursday, the State Power Company of China announced that it is conducting inspections on bitcoin and other crypto mining facilities.

“The article stated that virtual currencies such as bitcoin waste energy and evade financial supervision, and have no clear legal status in China,” crypto newswire WuBlockchain tweeted.

Also on Thursday, Sweden’s Riksbank Governor Stefan Ingves warned that “private money usually collapses sooner than later” during a banking conference. Ingves also compared bitcoin to “trading in stamps” and expressed concerns about money laundering.

And last week, the European Securities and Markets Authority published a report stating that “crypto assets are highly volatile in price and operate outside of the existing EU (European Union) regulatory framework, which raises investor protection issues.”

Ether holds support

Ether, the world’s second-largest cryptocurrency by market capitalization, is holding support above the $3,000 breakout level that was achieved in August. ETH declined from the $4,000 resistance level as buyers were unable to match the all-time price high around $4,360 reached in May.

2. Cardano Gains Smart Contract Capability Following ‘Alonzo’ Hard Fork

The latest upgrade ushers in an era of smart contract composability for the four-year-old network.

Cardano’s network update, Alonzo, is finally live. With Alonzo’s arrival at at 21:47 UTC at epoch 290, smart contracts — pieces of code that self execute when predefined conditions are met — can now begin to be created and deployed on the Cardano mainnet.

Cardano is an open-source public blockchain developed by Input Output and founded by Charles Hoskinson, one of the founders of Ethereum. First released in September 2017, it was designed to challenge Ethereum’s decentralized finance dominance while also maintaining a level of interoperability with Ethereum and other blockchains.

Smart contracts are the golden ring when it comes to mounting that challenge. After months of progress on the Alonzo testnet, today’s hard fork to the Cardano mainnet paves the way for smart contracts to be written in Plutus scripts, “a purpose-built smart contract development language and execution platform using the functional programming language Haskell.”

The update is a key part of of the Goguen era, which focuses primarily on building smart contract capabilities. Goguen was developed in tandem with Shelley, the earlier era that introduced proof-of-stake protocol Ouroboros to the network more than a year ago, as part of an effort to build out the network’s security and decentralization.

3. DeFi and the 3 Cs

The purely collateral-based type of lending practiced so far in decentralized finance has limitations. Reputation systems may widen the possibilities.

Imagine thinking that not collecting sensitive data is inherently a bad thing.

That canard seemed to be the subtext of two memorable lines in last Sunday’s front-page New York Times story about the regulatory crackdown on cryptocurrency lending.

In a passage explaining decentralized finance (DeFi) platforms, the authors note, with a faint whiff of disapproval, that “the sites do not even collect users’ personal information.”

The whiff gets stronger a few paragraphs later, in discussion of the Compound lending protocol, complete with air quotes.

“Each of the nearly 300,000 ‘customers’ is represented by a unique 42-character list of letters and numbers,” the authors write, referring in Gray Lady style to a user’s wallet address. “But Compound does not know their names or even what country they are from.”

Four years after the breach of the credit reporting agency Equifax, which exposed the personal information of 147 million people, would it have killed the Times to at least consider the upside of not storing such records?

“On the normal web, you can’t buy a blender without giving the site owner enough data to learn your whole life history. In DeFi, you can borrow money without anyone even asking for your name,” Brady Dale wrote last year.

Of course, there is a catch, as he was quick to add: “DeFi applications don’t worry about trusting you because they have the collateral you put up to back your debt (on Compound, for instance, a $10 debt will require around $20 in collateral).”

This purely collateral-based approach to lending taken so far in DeFi has disadvantages for the borrower and lender alike. A challenge for the industry is to move past the current model’s limitations without sacrificing the privacy-preserving innovation that the Times implied was some kind of outrage.

To understand those limitations, we have to take a detour to the musty, stuffy world of traditional finance.

4. Ark Investment Management Opens Door for Fund to Invest in Canadian Crypto ETFs

The Cathie Wood-founded firm disclosed the move through a revised prospectus to the SEC.

Ark Investment Management revised the prospectus for its ARK Next Generation Internet ETF (ARKW) to open the possibility of investing in crypto exchange-traded funds (ETFs) in Canada, according to a filing with the U.S. Securities and Exchange Commission (SEC) Friday.

“The fund may have exposure to cryptocurrency, such as bitcoin, indirectly through an investment in a grantor trust or in other pooled investment vehicles, such as exchange-traded funds domiciled in Canada,” the investment management firm founded by crypto bull Cathie Wood wrote, replacing previous language.

The amended document further says that the fund may invest in the Grayscale Bitcoin Trust (GBTC) or “other pooled investment vehicles that invest in bitcoin, such as exchange-traded funds that are domiciled and listed for trading in Canada (Canadian Bitcoin ETFs).” Grayscale is part of Digital Currency Group.

In a series of tweets, Bloomberg ETF analyst Eric Balchunas speculated that Ark was looking to replace ARKW’s investment in GBTC with a Canadian ETF. ARKW holds over 8.5 million shares of GBTC, making it the second-largest holding in the fund.

Balchunas noted that GBTC is down 22% year-to-date, while the Canadian ETF has dropped 6%. “That’s pretty significant dispersion,” he wrote. “I’m sure that’s irking them.”

5. Degenerate Ape NFT Sells for More Than $1M on Solana

The sale is a record for the layer-1 rival to Ethereum.

A Degenerate Ape Academy non-fungible token (NFT) on the Solana blockchain was sold Saturday for 5980 SOL, or about USD $1.11 million, in the largest-ever NFT sale on the rival to the Ethereum blockchain.

Apparently not content with having shelled out more than $1 million for an NFT of a scarred zombie ape with a halo eating a brain, Moonrock Capital, a Europe-based blockchain advisory and investment firm, announced a few hours later it had purchased a CryptoPunks knock-off NFT also on the Solana blockchain for 1388 SOL, or USD $257,446.24.

While the NFT craze initially focused on the Ethereum blockchain, that very popularity caused traffic and fees on Ethereum to skyrocket. As a result, rivals like Solana with much lower fees and traffic have taken off.

And the price of Solana’s native token has followed suit, with the coin’s market capitalization hopping over XRP and dogecoin, becoming the world’s sixth-largest cryptocurrency with a value of $54 billion compared with XRP’s $43.5 billion and DOGE’s $32 billion.

A month ago, one SOL could have been had for about $40. After hitting an all-time high earlier this week of more than $200, in recent trading the token was changing hands at about $185.

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September 13, 2021