Day: March 21, 2024

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The Terra blockchain encountered an unexpected halt on Thursday, marking the second disruption within the month. The core team is actively investigating the issue, as stated in an official update. Despite this setback, the price of LUNA, Terra’s native token, has remained largely unaffected, with a weekly loss of nearly 13%.

The Terra blockchain issued an official update regarding the sudden halt experienced on Thursday, the second such incident in March. The cause of the halt remains unclear, prompting the core team to intensify efforts to identify and resolve the issue. The community has been assured that updates will be provided as the investigation progresses.

In a previous occurrence on March 14, the Terra blockchain faced a similar unexpected issue resulting in a temporary halt. Following swift action from the team, block production resumed, and an initial investigation was conducted. While users were informed of the restoration, the team committed to conducting a post-mortem analysis to prevent future occurrences.

Just a week later, on March 21, the blockchain once again paused block productions, prompting a follow-up tweet from the team. Despite these interruptions, the price of LUNA has shown resilience, maintaining stability amidst the technical challenges. As of the latest update, LUNA is trading at $0.9224, representing a 4% increase for the day, recuperating from its weekly losses.

Currently, LUNA’s price is consolidating below the resistance level of $1. Despite the disruptions, the asset remains 41% below its year-to-date high of $1.55, recorded on March 5.

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BlackRock (NYSE:BLK), the world’s largest asset manager, demonstrates its commitment to the digital asset space by launching its inaugural tokenized fund, the BlackRock USD Institutional Digital Liquidity Fund (BUIDL). This move comes on the heels of its recent introduction of a spot Bitcoin (BTC) exchange-traded fund (ETF).

In collaboration with Securitize Markets, LLC, BlackRock aims to offer qualified investors the opportunity to earn U.S. dollar yields through the BUIDL fund, which will be tokenized on the Ethereum (ETH) blockchain as an ERC-20 token.

Robert Mitchnick, Head of Digital Assets at BlackRock, sees this as a natural progression of their digital assets strategy, emphasizing their focus on providing solutions that address real client needs.

Securitize is set to serve as a pivotal transfer agent and tokenization platform, overseeing tokenized shares and facilitating processes such as Fund subscriptions, redemptions, and distributions. BlackRock has structured the fund under the jurisdiction of the British Virgin Islands, with a minimum investment requirement of $100,000.

Tokenization remains central to BlackRock’s digital asset strategy, with CEO Larry Fink highlighting its potential to revolutionize capital markets. Carlos Domingo, co-founder and CEO of Securitize, views this development as a significant step towards making traditional financial products more accessible through digitization.

The BUIDL token offers various benefits, including enabling ownership issuance and trading on a blockchain, expanding investor access, ensuring instantaneous and transparent settlement, and facilitating transfers across platforms. BNY Mellon will facilitate interoperability between digital and traditional markets.

Designed to maintain a stable value of $1 per token and provide daily accrued dividends, BUIDL invests 100% of its assets in cash, U.S. Treasury bills, and repurchase agreements, offering investors yield while holding tokens on the blockchain.

Investors will have the flexibility to transfer tokens to pre-approved counterparts at any time and choose their preferred custody options. Anchorage Digital Bank NA, BitGo, Coinbase, Fireblocks, and other market participants and infrastructure providers in the crypto industry support the launch of BUIDL.

In a testament to community engagement, anonymous donors have sent various tokens and NFTs to the fund’s public Ethereum address, reflecting growing interest and support for BlackRock’s venture into digital assets.

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The momentum of Bitcoin Exchange-Traded Funds (ETFs) experienced a decline as BlackRock’s inflows dropped significantly. On March 20, BlackRock’s inflows amounted to $49.28 million, while Grayscale’s ETF witnessed higher outflows at $386 million.

For the second consecutive day, spot Bitcoin ETFs recorded negative flows. According to data from the financial research platform ‘SosoValue,’ Grayscale’s ETF GBTC observed a substantial outflow of $386 million on March 20. The previous day saw the same ETF recording $443 million in outflows, reflecting intensified selling pressure on Bitcoin.

Other ETFs failed to compensate for the outflow, as per SoSo Value data shared by WuBlockchain. BlackRock’s IBIT recorded the highest inflow at $49.28 million on the same day.

Since the approval of ETFs by the U.S. SEC in January, substantial inflows had been driving Bitcoin’s value upwards. However, the recent decrease in inflows suggested that institutional impact might be contributing to the 8.66% decline in Bitcoin’s price over the last seven days.

Despite Bitcoin trading at $67,018, indicating a resurgence of buying pressure, continued outflows surpassing inflows could potentially drive BTC below $60,000.

Bulls are attempting to counter the bearish sentiment prevailing in the market. Coin Edition noted a noticeable bearish bias based on technical analysis. The 4-hour BTC/USD chart revealed a death cross with the Exponential Moving Average (EMA), where the 20 EMA (blue) dipped below the 50 EMA (yellow), signaling a reinforcement of the downtrend. Bitcoin’s price also fell below the 50 EMA, suggesting a potential halt to the recent uptrend.

As it stands, Bitcoin may experience a decrease, with a potential target of around $58,463 if bulls fail to sustain pressure. Conversely, a surge in buying pressure could propel the coin towards $70,202.

The derivatives market also witnessed significant activity, with Bitcoin’s recovery triggering substantial liquidations. Coinglass reported over $317.55 million worth of BTC contracts liquidated, possibly due to high leverage or insufficient funding fees. Short positions constituted the majority of liquidated positions, while volatility also led to liquidations among longs.

The cascade of liquidations could further impact Bitcoin’s price from a trading perspective, with shorts potentially becoming more aggressive if BTC drops below $60,000.

In summary, the decline in Bitcoin ETF momentum, coupled with technical indicators and derivative market activity, suggests a challenging landscape for the cryptocurrency in the near term.

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Bitcoin’s (BTC) recent surge since the beginning of 2023 has reignited interest in the cryptocurrency realm. The launch of several spot BTC ETFs has propelled the top crypto to establish a new record high on March 14, breaking a historical milestone by achieving this feat over 45 days ahead of its next halving event.

Amidst the current correction phase in the crypto market, traders are eagerly searching for the next catalyst to drive prices higher. Analysts widely point to the impending halving as the potential trigger for the next rally. However, halvings pose a significant challenge for Bitcoin miners, as the 50% reduction in new BTC emissions slashes their revenue in half, prompting many to deactivate inefficient equipment post-halving, leading to a decline in the Bitcoin hash rate.

To gain insights into how miners are preparing for the halving and their subsequent strategies, Kitco Crypto engaged in a discussion with Greg Beard, CEO of Stronghold Digital Mining. Stronghold made history as the first mining company to launch an IPO approved by the Securities and Exchange Commission (SEC). Beard, formerly Head of Energy at Apollo, emphasized the importance of viewing crypto mining as a form of “power arbitrage,” highlighting Stronghold’s ownership of power plants and data centers.

Beard emphasized the evolving landscape of the crypto-mining industry and the necessity for miners to assess energy demands on local power grids. Stronghold’s unique approach allows them to swiftly adapt to fluctuating energy prices by turning off data centers during periods of expensive power and selling excess energy to the grid. Beard highlighted the impact of renewable energy sources on energy price volatility and underscored Bitcoin mines’ role as grid-scale batteries, providing stability to power grids.

Regarding Stronghold’s revenue diversification efforts, Beard mentioned ventures into carbon sequestration, coal ash sales, and exploring alternative fuel sources. He contrasted Stronghold’s resilience with the challenges faced by miners lacking their infrastructure, emphasizing the importance of creating additional industrial applications beyond Bitcoin mining.

Criticism towards Bitcoin mining’s energy consumption has overshadowed its contribution to improving energy efficiency and environmental remediation efforts. Beard emphasized Stronghold’s commitment to cleaning up waste coal sites and converting them into power generation facilities. However, he lamented the lack of recognition from ESG investors, highlighting a disparity between investor perceptions and environmental impact.

Addressing concerns over Bitcoin mining centralization, Beard downplayed the risk of a concentrated mining power disrupting Bitcoin’s decentralized nature, citing potential consolidation among public miners. He projected significant consolidation post-halving, with outdated machines being phased out for more efficient models, ultimately driving the industry towards industrial-scale operations.

Beard also discussed potential challenges posed by government regulations, including President Biden’s proposed tax on Bitcoin miners’ power consumption. He cautioned against singling out Bitcoin miners for taxation, warning of unintended consequences on innovation and economic growth.

Looking ahead, Beard anticipated Bitcoin ETFs’ role in driving price volatility, particularly with their obligation to purchase underlying assets upon investor demand. He underscored Bitcoin’s defensive appeal for populations facing economic instability due to inflation and mounting global debt.

As governments grapple with soaring debt levels, Beard highlighted the inflationary implications of printing money to service debt, expressing concern for future economic stability. Despite uncertainties, Beard remained optimistic about Bitcoin’s potential as a hedge against economic turmoil, emphasizing its role in preserving wealth amidst fiscal uncertainties.

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The market cap of real-world assets (RWA) has surged to $5.54 billion, marking a remarkable increase of over 31% in the last 24 hours. Similarly, the memecoin market cap has also witnessed a notable uptick, rising by over 16% during the same period. Among the top five memecoins, excluding Shiba Inu, all have recorded double-digit gains.

The RWA token market cap’s significant surge is evident across the top performers in the sub-sector. Notably, the native token of the Polymesh blockchain experienced a staggering 86.5% surge, followed by Centrifuge with a rise of 46.5%, and Ondo with a notable increase of 33% within the past 24 hours. Polymesh, a blockchain project tailored for security tokens, is one of the many protocols engaged in the tokenization of real-world assets, facilitating the conversion of asset rights into digital tokens on a blockchain.

Real-world assets span a broad spectrum, encompassing tangible and intangible items ranging from physical properties to patents and copyrights. The tokenization of these assets holds the promise of revolutionizing their handling and trading, potentially leading to increased liquidity, accessibility, and efficiency in asset management.

In the realm of memecoins, the market cap has also surged by 16.0% over the past day. Notably, all of the top five memecoins by market capitalization have witnessed significant gains, except for Shiba Inu, which saw a more modest 7% increase within the same period.

Among the top five memecoins, Floki has displayed the most remarkable rally, surging by over 38% within the past 24 hours, as per data from The Block’s Price Page at 6:19 a.m. ET.

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CoinGecko Research has identified the Solana network as the leading blockchain ecosystem of the year thus far. According to their report published on Wednesday, the layer 1 blockchain now commands 49.3% of global crypto investor interest in chain-specific narratives.

The report attributes Solana’s dominant mindshare to its resurgence back to 2021 highs, coupled with the impressive performance of key ecosystem project tokens such as Pyth and native meme coins like dogwifhat.

Thursday’s Coinbase market update further underscores Solana’s significance, revealing approximately $11 billion in transactions conducted on the Solana blockchain in just 24 hours on Monday. This surge in activity was driven by a plethora of smaller tokens, notably meme coins.

Memecoin Craze Fuels Solana Network Activity

Solana’s recent surge in activity has been primarily observed on decentralized exchanges (DEXs) like Jupiter and Raydium, where traders have been actively engaging with meme coins such as Bonk and Slerf. For close to four months, decentralized exchanges (DEXs) built on Solana have been consistently capturing a larger portion of the market compared to Ethereum-based DEXs such as Uniswap.

Tristan Frizza, Founder of Zeta Markets, commented on the spike in onchain meme coin speculation, highlighting coins like Slerf achieving staggering market caps of over $500 million within hours. This frenzy has largely been facilitated by automated market makers like Raydium, Orca, and the Jupiter aggregator, which enable token creators to swiftly establish new liquidity pools and trade these tokens.

In the past week, Solana’s onchain volumes have witnessed a significant surge, accompanied by a notable increase in network fees. As per The Block’s Data Dashboard, the daily transaction fees on the Solana network have been steadily increasing since the start of March, culminating in a record high of $5.08 million on Monday.

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On Wednesday, a significant crypto whale moved 12,000 ETH to Binance, as reported by Lookonchain. Despite ongoing regulatory concerns, Ether saw an 11% surge in value on the same day.

The investor, identified as a whale due to their substantial holdings acquired since 2017, transferred a sizable amount of ETH to Binance, possibly indicating an intention to liquidate the holding. The transaction, conducted by the address x50b42514389F25E1f471C8F03f6f5954df0204b0, amounted to $42.8 million at the time of transfer, constituting about 0.01% of the total circulating supply of Ethereum.

This transfer follows a similar move just a day prior when the same address shifted nearly 9,000 ETH to Binance, accompanied by the withdrawal of 30 million USDT (Tether), the largest dollar-pegged cryptocurrency.

The action prompted speculation within the crypto community, with Lookonchain suggesting the possibility of the whale selling the ETH. Such transfers to cryptocurrency exchanges often precede the selling or utilization of coins for margin trading in derivatives markets, potentially leading to increased price volatility.

Despite regulatory uncertainties, Ether’s value soared to $3,500 on Wednesday, marking an 11% increase from the previous day’s decline. The market rally persisted despite reports of the U.S. Securities and Exchange Commission’s consideration of classifying ETH as a security, a move that could impact the listing of spot ether exchange-traded funds and introduce stricter regulations for Ethereum-related projects.

However, data from Deribit’s options market indicates that traders maintain a more bearish outlook on Ether compared to Bitcoin (BTC). Options expiring in one week and one month show a premium on Ether’s put options, suggesting a prevailing sentiment of caution among traders.

A put option grants the purchaser the right, but not the obligation, to sell the underlying asset at a predetermined price on or before a specified date, indicating a bearish stance and a strategy to profit from or hedge against potential price declines.

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Cryptocurrency exchange OKX has informed its clients that it will no longer offer services in India. Customers are required to close their positions by the end of April, after which they can only withdraw their funds. The exchange cited regulatory considerations in the country as the reason for this decision.

In a notice, OKX informed its Indian clients that they must close all margin positions, as well as positions in perpetual, futures, and options, and withdraw all funds by April 30. The notice stated that after this date, accounts will be restricted to withdrawals only.

India brought digital asset service providers under its anti-money laundering framework in March 2023. Exchanges intending to operate in the country are required to register with the Financial Intelligence Unit India (FIU IND) and adhere to regulatory guidelines. However, as of the end of 2023, OKX had not completed this registration process.

The Indian government has been cracking down on exchanges operating illegally within its borders. In December, the FIU IND issued notices to nine exchanges deemed to be operating illegally, including Binance, Kraken, and MEXC Global. Notably, OKX should have been included in this list.

According to sources familiar with the matter, several of the exchanges that received notices have engaged in discussions with Indian authorities to resolve the situation.

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The cryptocurrency markets witnessed a tumultuous 24-hour period influenced by regulatory uncertainties and macroeconomic decisions.

Overnight, the crypto markets experienced significant volatility with bitcoin and ether initially declining before bouncing back to trade 15% higher than their lows on Wednesday.

The drop on Wednesday was attributed to profit-taking following last week’s rally and a wave of leveraged bets on higher prices, with some traders pointing to a technical downtrend.

Market sentiment shifted after U.S. Federal Reserve Chair Jerome Powell’s dovish FOMC speech, leading to a surge in BTC, ETH, and other major tokens, particularly layer-2 platforms and meme coins.

The inherent volatility of crypto markets was evident as bitcoin (BTC) and ether (ETH) fluctuated, ultimately rebounding to trade 15% above their Wednesday lows.

BTC and ETH recorded gains of up to 11% in the past 24 hours, leading the rally among major tokens. Other tokens like Solana’s SOL, Cardano’s ADA, and BNB Chain’s BNB also saw gains of up to 8%, according to data from CoinGecko. The CoinDesk 20 Index, measuring the broader crypto market, was up by 7.62%.

Layer-2 platform tokens, based on Ethereum, experienced an average increase of 25% in the past day, as per CoinGecko data. Meme coins followed suit with a 16% surge.

On Wednesday, markets began to decline in early Asian trading due to profit-taking and leveraged bets, resulting in a 15% drop in overall market capitalization over the past week. Some traders speculated that bitcoin showed signs of a technical downtrend, indicating potential further losses.

Sentiment shifted later in the day after Jerome Powell’s FOMC speech, which maintained a dovish tone despite higher-than-expected inflation figures.

Singapore-based trading firm QCP Capital noted in a daily update that spot transactions were driving demand, rather than futures-led trading, suggesting genuine market demand.

Dogecoin (DOGE) saw an 18% jump following news of a Coinbase filing on March 7, indicating plans to offer DOGE, Litecoin (LTC), and Bitcoin cash (BCH) futures by April 1.

Some traders viewed this move as a potential precursor to a spot DOGE exchange-traded fund (ETF).

Coinbase, known for its stringent listing criteria and regulatory compliance, stated in the filing that DOGE had evolved beyond a mere “joke” token, highlighting its enduring popularity and strong community support.

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Coinbase (NASDAQ:COIN) Global Inc. is set to bolster its trading infrastructure in response to challenges faced by users during a significant upswing in Bitcoin prices towards the end of February, according to CEO Brian Armstrong. The platform encountered issues due to an unforeseen surge in trading volumes that surpassed the company’s predictive models, even accounting for preparations for volumes up to ten times the norm following the approval of spot Bitcoin exchange-traded funds (ETFs). This surge in trading activity was primarily fueled by Bitcoin’s attainment of new all-time highs, soaring above $73,000 in the initial weeks of March. The interest in recently approved ETFs backed by Bitcoin, spearheaded by major players such as Fidelity and BlackRock Inc (NYSE:BLK), notably contributed to this heightened trading volume. These ETFs have collectively accrued over $12 billion since their green light in January. Armstrong underscored the surge in trading volume as emblematic of the wider adoption of digital assets, stressing the significance of reliable infrastructure to sustain this expansion.

Market Overview

• Coinbase experienced trading outages due to Bitcoin’s price surge at the end of February.
• Interest in Bitcoin ETFs, particularly from Fidelity and BlackRock, drove record trading volumes.
• Bitcoin soared to new all-time highs, surpassing $73,000 in early March.

Key Points

• Coinbase intends to boost investment in trading infrastructure following unforeseen spikes in trading volume.
• The company had previously prepared for a tenfold increase in trading volume, which was surpassed.
• ETFs backed by Bitcoin have been instrumental in driving increased trading activity, accumulating over $12 billion since January.

Looking Ahead

• Continued investment in Coinbase’s trading infrastructure to manage surges in trading volume.
• Monitoring the impact of Bitcoin ETFs on market dynamics and trading volumes.
• Emphasis on the importance of robust infrastructure to facilitate broader adoption of digital assets.

Conclusion

Coinbase’s encounter with unprecedented trading volumes underscores the escalating interest and adoption of digital assets, underscored by the successful introduction of Bitcoin-backed ETFs. This scenario underscores the imperative for ongoing enhancement and investment in trading infrastructure to accommodate rising demand and ensure user reliability. Moving forward, the focus will be on augmenting infrastructure capabilities to support the dynamic and swiftly evolving digital asset market, marking a significant phase in the maturation and broader acceptance of cryptocurrencies.

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