Coin360 Weekly Dispatch | Crypto Market Updates & Highlights | August 19 - August 25, 2023

Table of Contents

Crypto Market Overview

• Crypto Weekly Recap: Price Actions, Market Trends, and Key Developments

New Regulations and Compliance

• New U.S. Regulations Target Crypto Tax Gap

Crypto Exchanges and Stablecoins

• Coinbase Invests in Circle to Expand USDC Stablecoin Utility

Cryptocurrency Market Volatility

• PEPE Coin's Market Cap Drops $100m; Security Concerns Rise

Business and Technology Insights

• Friend.tech's Success Shadows Potential Challenges in Healthcare Tech

Banking and Regulatory Updates

• Tether Maintains $3.3 Billion Liquidity Cushion; Backing Confirmed
• Mastercard, Visa End Crypto Card Partnerships with Binance

Cryptocurrency Market Trends

• Bitcoin Dips Below $26,000; Fed’s Hawkish Speech Impacts
• ARK Invest, 21Shares Apply for Ether, Bitcoin Futures ETFs
• Prime Trust Files Bankruptcy; Losses Linked to TerraUSD Stablecoin
• Kroll's Cybersecurity Breach Affects FTX and BlockFi Customers

NFT Developments

• Major NFT Collections See Over 25% Drop in Floor Prices
• Rarible to Stop Aggregating Orders; Royalty Debate Continues
• Major NFT Collections Hold, Despite Market Contraction
• Trump's NFT Cards Spike 25% After GOP Debate Skip
• RECUR Shuts Down; Bear Market Forces NFT Platform Closure

Crypto Weekly Recap: Price Actions, Market Trends, and Key Developments

Bitcoin:

• Weekly change: -2.7%.
• Over the weekend, BTC stayed in the $25,800 to $26,200 range.
• BTC's low volatility continued in this range until mid-Tuesday (UTC).
• A $55M outflow from digital assets occurred after an ETF delay disappointment, and Vitalik Buterin sent $1M in ETH to Coinbase.
• On Tuesday, the FBI announced that North Korean hackers Lazarus Group and APT38 planned to sell $40M in Bitcoin.
• A Bitcoin wallet became the 3rd largest holder in 3 months with 118,000 BTC and was later found to be Robinhood.
• BTC rebounded from its weekly low of $25,659 to over $26,000 on Wednesday, then fell again.
• It reached a weekly high of $26,727 before Nvidia's earnings report and Fed's Jerome Powell's speech, leading to a surge in AI cryptocurrencies.
• BTC retraced but maintained $26,000 from Wednesday to mid-Friday, and Pantera predicted a 322% surge to $148,000 after 2024's halving.
• Bitcoin's difficulty increased by 6% to a new peak.
• As of Thursday, 156,660 wallets holding 10 to 10,000 BTC accumulated $308.6M since August 17, possibly aiding market recovery.
• On Friday, Santiment reported that Bitcoin's supply on exchanges was at its lowest in nearly 6 years.
• BTC dropped below $26,000 as Fed's Powell spoke on restrictive policy, and the U.S. proposal for taxing crypto gains faced objections.

Ethereum:

• Weekly change: -2.24%.
• On Saturday afternoon, ETH hit its weekly high of $1,696.
• Over the weekend, ETH fluctuated between $1,670 and $1,690 before dropping on Monday.
• ETH declined until Tuesday night (UTC), potentially impacted by Vitalik's $1M transfer.
• Whales capitalized on the dip, purchasing $94M in ETH and also bought altcoins like LDO, UNI, and AAVE, possibly having an impact on the Ethereum market cap.
• ETH rebounded to $1,694 on Wednesday, reflecting slightly improved market sentiment.
• Similar to BTC, this rebound was brief, and ETH returned to $1,650 on Friday.
• Glassnode founders believe that a possible breakout could be in store due to the current selling pressure on ETH.

Altcoins:

• Arbitrum denied outage despite transaction issues
• THORChain processed record volume after adding streaming swaps
• Dogecoin debated switching to proof of stake, DOGE millionaire's fortune dropped from $3M to $50K 
• Terra website was hacked
• Over $120M in token unlocks last week for Avalanche, Lido, Yield Guild Games
• Less than 221 holders had 30% of XRP circulating supply, XRP was top choice of young investors in Korea, XRP whale moved 29M tokens amid price slide
• Critical vulnerability was found in some Balancer V2 pools
• Thailand warned Meta about crypto scams
• CoinDCX cut 12% of jobs amid bear market, taxes
• Maple Finance expanded to Asia with $5M investment, returned to Solana
• SBF pleaded not guilty at latest FTX hearing  
• Binance Labs invested in Pendle Finance DeFi platform
• NEAR jumped 5% after Nexo integration
• 99.5% of AVAX holders were in loss as bear market continued 
• Atomic Wallet faced $100M hack lawsuit
• Quantstamp tool detected DeFi flash loan risks
• Tornado Cash founders were charged and arrested by FBI 
• ALGO surged on Cardano partnership potential  
• Nvidia earnings lifted AI cryptocurrencies (FET, RNDR, AGIX)
• Shibarium restart boosted BONE price 15% in one day
• Smart money increased dYdX token holdings
• 1inch joined DeFi projects launching on Base
• VeChain and SingularityNET partnered on climate change AI
• Lido to complete final token unlock tomorrow
• DeFi TVL was at 30-month low amid crypto winter 
• Litecoin has been down 95% against Bitcoin
• Base-based Magnate Finance disappeared in apparent rug pull
• Worldcoin's WLD crashed 44% postlaunch
• Maker led DeFi tokens with least holder losses 
• DeFiChain was up 16% as Cake burned ETH staking rewards
• Uniswap outperformed Coinbase in spot trading volume in 2023

New U.S. Regulations Target Crypto Tax Gap

The US Treasury Department and Internal Revenue Service (IRS) have proposed new regulations requiring cryptocurrency exchanges to report detailed information on customer transactions, including capital gains and losses. The regulations aim to address the current digital asset tax gap, which amounts to over $500 billion annually. Initially expected to start in 2023, the regulations have been postponed until the final draft of the framework is unveiled, with reporting to begin in 2026. 

The proposal is part of the Biden administration's push to crack down on crypto users who may be evading tax payments. This new proposal has been met with criticism from the crypto industry. Critics argue that the tax-reporting demands may capture decentralized crypto operations that are impossible to bring into compliance. 

Coinbase Invests in Circle to Expand USDC Stablecoin Utility

Coinbase has invested in Circle, the creator of the USDC stablecoin, to expand the cryptocurrency's integration and explore broader utility prospects. USDC plans to infiltrate six new blockchain networks, taking the total count of USDC-supported chains to 15. USDC has seen a receding trend in market capitalisation, declining by approximately $18.5bn on a year-to-date basis. 

However, the number of addresses using USDC stablecoin has surged to a peak of 11.79 million. Coinbase's investment in Circle includes an undisclosed equity stake and is set to explore broader utility pathways while continuing to cultivate USDC's burgeoning ecosystem.

PEPE Coin's Market Cap Drops $100m; Security Concerns Rise

PEPE Coin, a cryptocurrency, saw its market capitalization drop by $100m within 24 hours, as its price fell 18%, highlighting the volatility in crypto coin prices. The drop followed the transfer of 16.045tn PEPE coins, worth around $16.85m, to four leading cryptocurrency exchanges: Binance, OKX, KuCoin and Bybit. 

The security of the multisig wallet has since been modified, curtailing the number of signatures required to validate transactions. Concerns have been raised that the modifications represent a security downgrade and could lead to a “rug pull” scenario.

Friend.tech's Success Shadows Potential Challenges in Healthcare Tech

Friend.tech has experienced significant success recently, but there are concerns that this may be concealing deeper challenges. The company specializes in developing software for the healthcare industry, and its success has been driven by a combination of innovative solutions and strong partnerships. 

However, there are concerns about the company's ability to maintain its growth trajectory in the face of increasing competition and changing market conditions. Additionally, there are concerns about the company's culture and management practices, with some employees expressing dissatisfaction with their working conditions. 

Tether Maintains $3.3 Billion Liquidity Cushion; Backing Confirmed

Tether, the stablecoin issuer, maintains a liquidity cushion of approximately $3.3 billion to ensure stability in its ecosystem. Its total assets amount to $86.1 billion, with liabilities at $82.8 billion, confirming a reserve backing of over 100%. Tether's transparency report contradicts concerns about liquidity and asset backing, even after being fined $41 million for making false statements about reserves. 

The report also states that only USDT enjoys a liquidity cushion for maintaining a 1-1 peg during crises, while other stablecoins under Tether do not. Tether recently discontinued its Bitcoin version of USDT.  

Mastercard, Visa End Crypto Card Partnerships with Binance

Mastercard and Visa have terminated their co-branded crypto card partnerships with Binance, affecting users in countries like Argentina, Brazil, Colombia, and Bahrain. Mastercard's offerings will cease on September 22, while Visa's ended in July. Binance assured that only a small fraction of users will be affected, and Mastercard will still offer other crypto-related services. 

Meanwhile, Binance has faced legal and regulatory hurdles. Separately, Binance CEO Changpeng Zhao (CZ) debunked allegations on Twitter of a significant Bitcoin (BTC) sell-off by Binance, linked to a 7% drop in BTC price, through a detailed analysis.

Bitcoin Dips Below $26,000; Fed’s Hawkish Speech Impacts

Bitcoin's price fell below $26,000 on Friday after Federal Reserve chair Jerome Powell's hawkish speech in Jackson Hole, Wyoming, an event that underlined the complex dynamics affecting the crypto price. Powell indicated that the central bank might be willing to raise rates further to bring inflation down to its 2% target. The dollar index also increased, potentially impacting risk assets like bitcoin. 

Meanwhile, Patrick Harker, President of the Federal Reserve Bank of Philadelphia, expressed doubt about interest rate cuts until 2024. He also stated that there is no need for further rate hikes at the moment but mentioned that the Fed's outlook could change if inflationary pressures decrease. 

ARK Invest, 21Shares Apply for Ether, Bitcoin Futures ETFs

ARK Invest and 21Shares have jointly applied for two futures exchange-traded funds (ETFs) involving ether and bitcoin. The ETFs, ARK 21Shares Active Ethereum Futures ETF (ARKZ) and ARK 21Shares Active Bitcoin Ethereum Strategy ETF (ARKY) will provide exposure to these assets through cash-settled futures contracts. 

The funds will also allocate a portion of their assets to U.S. Treasuries, money market instruments, and repurchase agreements. This filing follows a trend of firms seeking approval for ether futures ETFs, with the SEC reportedly considering their approval. ARK Invest and 21Shares are also awaiting a decision on three bitcoin-futures-related funds. 

Prime Trust Files Bankruptcy; Losses Linked to TerraUSD Stablecoin

Crypto custodian Prime Trust filed for bankruptcy on Aug. 14, revealing that its investment in the now-failed TerraUSD stablecoin resulted in the loss of $6m of client funds and $2m of treasury funds. The firm also spent money despite declining revenue, resulting in net losses of $7.4m in October 2022 and $8.4m in November 2022. 

Prime Trust purchased $76.4m worth of Ethereum to cover customer withdrawal requests after losing access to certain funds, which occurred after moving its crypto to storage service Fireblocks in July 2019. The firm had $82.8m in fiat deficits and $861,000 in cryptocurrency deficits at the time of its failure.

Kroll's Cybersecurity Breach Affects FTX and BlockFi Customers

Kroll, the bankruptcy claims agent, suffered a cybersecurity breach that compromised the personal information of some FTX and BlockFi customers. FTX confirmed the breach was caused by a security incident that exclusively impacted non-sensitive customer data belonging to certain claimants involved in the company’s bankruptcy case. 

Kroll is directly notifying the impacted claimants of measures they could take to protect themselves. BlockFi confirmed that there was unauthorized access to the data of some of its clients on the claims administration platform, but it did not affect its internal systems and client funds.

Top Weekly Altcoin Gainers and Losers

Gainers:

dYdX DYDX (+13.78%)

FTX Token FTT (+8.97%)

Rollbit Coin RLB (+8.56%)

Stellar Lumens XLM (+7.95%)

Optimism OP (+7.56%)

Losers:

Pepe PEPE (-18.68%)

FLEX FLEX (-18.41%)

Conflux CFX (-11.91%)

ApeCoin APE (-9.62%)

Curve DAO Token CRV (-9.59%)

NFT Market Map

Major NFT Collections See Over 25% Drop in Floor Prices

Major NFT collections have experienced significant losses, with floor prices dropping by more than 25% in the past month. The Bored Ape Yacht Club collection's floor price has declined by 27%, while DeGods is down by 55%, and Azuki saw a 36% drop in its floor prices. 

The NFT-500 index is down 40% year-to-date, and the Blue Chip 10 index is down 33%. Despite this, some lesser-known collections like Milady and Sproto Gremlins have seen gains, with floor prices rising by 66% and 262% respectively.  

Rarible to Stop Aggregating Orders; Royalty Debate Continues

NFT aggregator Rarible will stop aggregating orders from OpenSea, LooksRare, and X2Y2 by September 30. The move follows OpenSea's decision to make NFT creator royalties optional for new collections from September, after similar decisions from LooksRare and X2Y2 last year. Rarible cited its permanent support for artist royalties as the reason for the move. 

NFTs were initially touted for their potential to provide artists with ongoing income through royalties from continuous sales of their collections. However, when X2Y2 introduced a 0% royalty fee for creators in February 2022, it sparked a debate within the community about the actual necessity of such royalties.

Major NFT Collections Hold, Despite Market Contraction

Despite the sharp contraction in the NFT market, cryptocurrency charts reveal that a significant majority of major collections, including CryptoPunks, Otherdeed, and Meebits, have not been traded. Over the past eight months, 91% of CryptoPunks, 89% of Meebits, and 84% of Otherdeed NFTs have not changed hands. 

While trading volumes have dropped significantly, blue chip NFT holders are holding onto their assets. The number of unique Ethereum NFT transfers has also decreased by over 90% from its peak in July 2022. It is unclear what motivates these holders to retain their assets. However, some platforms, such as Blur and Binance, offer NFT-backed loans to these holders.  

Trump's NFT Cards Spike 25% After GOP Debate Skip

The price of ex-President Donald Trump's NFT trading cards spiked by 25% after he skipped the GOP debate to talk with Tucker Carlson. Trading volume rose by 256% to $23.5m in the past 24 hours, with sales jumping by 220%. However, the price jump is mostly due to the activity of two wallets snapping up the NFTs. 

Trump launched his NFT trading cards last December and buyers lost enthusiasm, but they keep bouncing in price and volume whenever something happens to the ex-reality TV show star.

RECUR Shuts Down; Bear Market Forces NFT Platform Closure

RECUR, an NFT platform that raised $50m in 2021, has announced it is shutting down due to the bear market. The platform will transfer all NFT media and metadata to a decentralised storage protocol, IPFS, to allow users to access their NFTs after the closure. 

RECUR has halted primary and secondary sales and will disable NFT deposits by 9 November 2023. Users have until 16 November to withdraw their remaining NFTs and USDC from the platform. The decision comes after the prolonged bear market has put a significant hole in RECUR's pocket.

This article has been refined and enhanced by ChatGPT.