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June 10  |  13 min read

Crypto Week #23 Overview

The COIN360 Editorial Team

The bullish run that saw the price of Bitcoin and other cryptocurrencies recover from the crash of 2018 has come to a temporary end as Bitcoin and most of the top 5 cryptocurrencies closed the week with significant losses for the first time in over a month, with Litecoin being the only coin of the top 5 to close the week with gains. Other developments include more details about Facebook’s crypto project and a release date for its white paper, CME Bitcoin futures open contracts hitting an all-time high, $9M in XRP getting lost in a hack, and a Polish exchange shutting down operations and disappearing with its customers’ funds.

Here’s what you need to know about last week’s happenings in crypto.

Bitcoin (BTC) opened the week high at $8,741.75 and shortly after attained its highest price of the week, at $8,743.50.Tuesday started with BTC at $8,210.99 and later saw the currency sink to its low of the week at $7,564.49, 13.5% lower than its week high the day before. Bitcoin stayed under $7,937.34 through Wednesday and Thursday, then the original cryptocurrency slightly picked up the pace on the weekend, peaking at $8,126.15 on Friday and $8,076.89 on Saturday. Sunday started and ended with BTC at $7,949.67 and $7,688.08 respectively, chalking up a 3.3% loss on the day and a 12.1% loss for the week. Bitcoin’s market capitalization was at $145.6B on Monday and it shed 6.3% throughout the week, closing Sunday at $136.5B.

Bitcoin 7-day price and market cap chart. Source: COIN360

Bitcoin 7-day price and market cap chart. Source: COIN360

Ethereum (ETH) also started the week at the top, peaking for the week at $270.33 on Monday. The price went down rather fast, as Tuesday’s low—and the week’s second lowest price—came in at $236.13, 12.7% lower than Monday’s high. Wednesday, Thursday and Friday had ETH close with small gains. Saturday, however, closed in the red at $245.74 and Sunday featured the lowest price of the week at $229.26, 15.2% lower than the week’s high on Monday. At the end of the day, ETH was at $233.09, with a 5.1% loss for the day and a 13.7% loss for the week. The market capitalization for Ethereum closed Monday at $26.9B, but by Sunday it had lost 7.7% of its value, closing the week at $24.8B.

Ethereum 7-day price and market cap chart. Source: COIN360

Ethereum 7-day price and market cap chart. Source: COIN360

Ripple (XRP) started the week high, and—in line with the market trend—peaked for the week on Monday at $0.459579. By Tuesday, XRP had lost almost 15% of its value, bottoming out for the day at $0.391093. Wednesday’s and Thursday’s lows registered similarly, and by Friday XRP’s price seemed to be picking up, peaking at $0.430532 for the day and then at $0.425115 on Saturday. Sunday started with the price of XRP a little lower, at $0.412689, and then later that day XRP bottomed out for the week at $0.379967, 17.3% lower than Monday’s high-mark. By Sunday’s end, XRP’s price had barely gone up, closing for the day at $0.388266, with a 5.9% loss for the day and a 12.7% loss for the week. Ripple’s market capitalization closed just under $18B on Monday, having lost 8.7% throughout the week and closed on Sunday at $16.4B.

Ripple 7-day price and market cap chart. Source: COIN360

Ripple 7-day price and market cap chart. Source: COIN360

Litecoin (LTC) opened high on Monday at $114.67, but, unlike the aforementioned coins, went on to finder greener pastures. LTC’s lowest price of the week occurred the next day, on Tuesday, at $99.29. That was the only time during the week in which LTC’s price dipped below $100. Wednesday didn’t show significant changes, as the coin moved between $101.22 and $104.84. On Thursday LTC’s price started to increase and on Friday the high of the week took place at $120.64, 21.5% higher than the week’s low on Tuesday. Saturday and Sunday also experienced high prices, closing at $118.55 and $115.13 respectively. Litecoin closed the week with a 2.9% loss for the day and a 0.4% gain for the week. The market capitalization for Litecoin closed at $6.7B on Monday, and unlike the aforementioned cryptocurrencies, it experienced gains throughout the week, increasing 7.3% and closing at $7.2B on Sunday.

Litecoin 7-day price and market cap chart. Source: COIN360

Litecoin 7-day price and market cap chart. Source: COIN360

Bitcoin Cash (BCH) started the week high at $443.73 and, like the top 3 cryptocurrencies, found its high of the week on Monday, at $446.75. By the end of the day, however, the coin had already gone down to $408.66 and on Tuesday, its price continued to decrease until it reached its low of the week, at $368.95, 17.4% lower than the high of the day before. Wednesday and Thursday closed at $398.38 and $396.93 respectively, and Friday closed at $401.43. The weekend saw BCH’s price decrease, closing at $394.24 on Saturday and at $381.17 on Sunday, with a 3.3% loss for the day on the latter and a 14.1% loss for the week. The market capitalization for Bitcoin Cash also experienced losses during the week, closing at $7.3B on Monday and at $6.8B on Sunday, shedding 6.7% throughout the week.

Bitcoin Cash 7-day price and market cap chart. Source: COIN360

Bitcoin Cash 7-day price and market cap chart. Source: COIN360

2. Facebook Plans for Outside Foundation to Govern its Cryptocurrency; White Paper Coming on Jun. 18

According to a report by digital media company The Information, Facebook is planning to cede control of its cryptocurrency to outside backers and create a foundation to govern it. Facebook has held discussions with multiple financial institutions and tech companies about licensing the rights to operate a node of the cryptocurrency’s network, charging them $10 million for each node. Facebook is reportedly taking a more centralized approach and wants to launch the network with 100 nodes, thus generating $1 billion in licensing fees, which would in turn be used to back the token with a basket of multiple currencies and low-risk securities. Facebook is also supposedly drafting up ways for the token to be used for payments in the physical world and looking into offering terminals where people can exchange local currencies for the token. Additionally, multiple sources have claimed that the white paper of the project (codenamed “Libra”), is scheduled for a June 18 release.

3. CME Bitcoin Futures Open Contracts Hit All-time High

Chicago Mercantile Exchange’s (CME) Bitcoin futures’ open contracts have reportedly achieved an all-time high. The number of open positions for the contracts during the week of May 27 to Jun. 3 was 5,190, which makes it the highest amount ever, increasing 7% from the week before. This record, next to a record volume reported by Bitcoin futures on May 13, could “be a sign of increased institutional interest in Bitcoin”, as May also reported a new average daily Bitcoin futures trading high at 14,000.

4. $9M in XRP Lost in GateHub Hack

A June 6 statement announced that nearly 100 XRP Ledger wallets on GateHub had been compromised by means of hacking. The investigation after the incident revealed that there was an increase in API calls coming from a small number of IP addresses. This is believed to be how the attacker got access to encrypted secret keys, though no explanation has been found as to how said keys could have been decrypted. A subsequent report by XRP Forensics revealed that more than 23M XRP (about $8.9M at press time) had been stolen from 80-90 victims, much of which has already been laundered. An official follow-up statement revealed that 103 wallets suffered losses from the attack.

5. Ripple Commits to Report More Accurate Trading Data

Following reports of fake cryptocurrency trading volumes and a Coin Metrics report detailing “discrepancies in Ripple’s escrow that required explanation”, Ripple, the company behind XRP, announced they are “actively working (...) to better understand the scope and scale of the [aforementioned fake trading volumes] problem”. After recent reports related to fake Bitcoin trading volumes arose, as well as a report that came out last January claiming that XRP’s market capitalization could possibly be overvalued by 48%, Ripple addressed the concerns and stated that the firm would take a more conservative approach to XRP sales in Q2 2019, as well as collaborate with different partners in the space to evaluate how they report XRP data. XRP’s basis points will also be changed, as they will be likely cut in less than half of what they were before (from 20 bps to less than 10 bps).

6. NEO Implements Upgraded Version of Its Consensus Mechanism

Chinese blockchain platform NEO has released dBFT 2.0, an upgrade of its consensus mechanism on its mainnet, according to a June 4 press release. The improved mechanism supposedly guarantees immediate transaction finality, including a recovery method which helps failed nodes of the network to get back online easily. It also adds a “commit phase” of consensus, which forces nodes to commit to a single new block, which eliminates the problem of forked blocks, thereby stabilizing the network and making transactions “truly irreversible”. According to Erik Zhang, founder of NEO, users will only need to wait for a 15-second confirmation to ensure the irreversibility of transactions and prevent double-spending.

During a Jun. 6 interview, Jay Clayton, chairman of the United States’ Securities and Exchange Commission, stated that there are various issues that need to be resolved before a cryptocurrency ETF will be approved in the US. Namely, Clayton referred to custody and an alleged lack of preventive measures for market manipulation as issues that need to be resolved before the SEC feels comfortable with the idea of an ETF being approved.

8. SEC Sues Kik for Conducting an Unregistered ICO in 2017

According to a June 4 press release, the SEC sued instant message company Kik Interactive Inc. for “conducting an illegal $100 million securities offering of digital tokens.” The regulator claims that Kik sold Kin tokens to US investors without going through the registration process, which is a violation of the registration requirements of Section 5 of the Securities Act of 1933. According to Steve Peikin, co-director of the SEC’s Division of Enforcement, Kik deprived investors of information to which they were legally entitled, preventing them from making informed investment decisions. Kik allegedly marketed the token as an investment opportunity by telling investors that the value of Kin would go up, which did not happen. The SEC is seeking a permanent injunction, disgorgement plus interest, and a penalty for the unregistered offering.

9. Grin Network’s First Hard Fork to Take Place in Mid-July

According to Grin developer Quentin Le Sceller, the first hard fork for privacy-centric cryptocurrency Grin is expected to take place on July 17, which is the expected date for hitting block height 262,080. This will be the first of four system-wide upgrades (which are expected to happen roughly every six months) to the network, and it will involve the tweaking of its PoW algorithm to ensure that the network remains ASIC resistant. The hard fork will also include an upgrade which will improve the flexibility and usability of the Grin wallet.

10. Report: Crypto Market Downgraded to “Uncertain”

The latest volatility report from SFOX has seen its Multi-Factor Market Index for the cryptocurrency market move from “mildly bullish” to “uncertain”. The report notes that the crypto market as a whole went through a substantial recovery in May of 2019, but that the overall sentiment is at a tipping point and that it was not clear how much of that growth was actually due to FOMO. The report also says that the fact that the Binance hack of last month did not crash the price of BTC demonstrates that the infrastructure of the market has matured, but that the sale of 5,000 BTC at only $6.2K on Bitstamp on May 17 demonstrates that a single exchange can still have a significant impact on the asset.

11. Poloniex Margin Lenders Lost $13.5M In Flash Crash

A flash price crash in the CLAM market led to margin loans losses of about 1,800 BTC ($13.8M at press time), according to an official blog post. After the price crash, which happened on May 26, the exchange froze all accounts tied to the defaulted borrowers, which will remain frozen until they repay their loans. According to the official blog post, the velocity of the crash and the lack of liquidity in the CLAM market made it impossible for all automatic liquidations of CLAM margin positions to process normally, which, when compounded with the fact that a significant amount of the total loan value was collateralized in CLAM, made it impossible for borrowers to repay their loans. Poloniex claimed that funds will be returned to the affected lenders as soon as the money is recovered.

12. Coinroom Exchange Has Reportedly Ceased Operations and Taken Customer Funds

Poland-based cryptocurrency exchange Coinroom has reportedly shut down all operations and disappeared with customer funds. The exchange’s index on CoinMarketCap shows that Coinroom’s activities have terminated and its Twitter page has been deleted. Before ceasing operations overnight, the exchange allegedly emailed its customers about contract terminations. Reportedly, customers had only one day to withdraw their funds, and some of them stated that they only received part of their money, while others didn’t receive any of their funds back. Another customer stated that he had gone to Coinroom’s headquarters and was not able to contact anyone from the exchange. In addition to this, the District Prosecutor’s Office in Warsaw revealed that they had already initiated proceedings against the exchange on accounts of unauthorized activities related to payment services and that they are currently looking for other possible victims of the exchange.

Final Thoughts

Cryptocurrencies across the board took a tumble last week, with most of the top 5 coins experiencing significant losses, and the developments regarding Coinroom suddenly ceasing operations and the GateHub hack clearly aren’t doing much to boost the morale of traders. However, one bad week is not necessarily indicative of the end of the latest bullish run, as prices can still rebound. What’s more, multiple sources confirming that the white paper of Facebook’s crypto project will be released on June 18 means that the general public should become aware of it within a matter of days. Depending on how the white paper is received, it could potentially introduce cryptocurrency to millions of new users, which could have a long-lasting effect on the market. Considering that Instagram and WhatsApp are owned by Facebook makes the release of the white paper all the more important for the future of the industry.

We wish you a great week,
The COIN360 Editorial Team