Author: Faith Yakubu

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As Bitcoin’s price stabilizes near its previous all-time highs, many are questioning whether the current bull run has come to an end. However, historical data indicates otherwise. The market is presently testing support at the “fair value band” for the second time since the recent halving event. This pattern is reminiscent of the 2016 and 2020 cycles, during which Bitcoin similarly moved sideways before experiencing a significant breakout. With Bitcoin priced at $55,000 just 124 days post-halving, it is premature to declare the bull run finished. Historically, substantial price surges have followed around 160 days post-halving.

Whale Accumulation and Liquidity Signal Strength

Institutional investors, particularly Bitcoin whales, are demonstrating strong confidence in the market. Wallets holding between 100 to 1,000 Bitcoin have accumulated an additional 100,000 Bitcoin in just the past six weeks. This increased accumulation, occurring as Bitcoin consolidates at its fair value, suggests that large investors are positioning themselves for a forthcoming upswing. Additionally, rising global liquidity often precedes major Bitcoin price movements. This pattern, observed in past bull runs, indicates that a significant upward move could be on the horizon.

Institutional Adoption and Dollar Weakness

Institutional adoption of Bitcoin is gaining momentum, with approximately 60% of the largest U.S. hedge funds now holding Bitcoin exposure. This growing acceptance further establishes Bitcoin’s legitimacy in traditional finance. Companies like MicroStrategy, which shifted its strategy to holding Bitcoin as treasury, have seen substantial growth since 2021. Furthermore, the strength of the U.S. dollar plays a crucial role in Bitcoin’s price dynamics. Historically, Bitcoin’s price has surged when the dollar weakens. Current trends in the dollar index suggest a potential breakdown, which, combined with increasing institutional and retail adoption, implies that Bitcoin’s bull market remains robust and is likely to accelerate in the coming months.

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State Street’s New Digital Asset Strategy

State Street, a leading global custody bank managing $44.3 trillion in assets, has selected Taurus, a specialist in cryptocurrency custody and tokenization, to advance its digital asset services. The partnership comes as the bank prepares to navigate U.S. regulatory challenges, focusing initially on tokenization rather than direct crypto custody.

Initial Focus on Tokenization

The initial phase will concentrate on creating tokenized versions of traditional assets, with the first client expected to be announced shortly after the service goes live. Tokenization allows for benefits such as 24/7 trading and optimized collateral management and aims to bridge the gap in digital asset services while awaiting a more favorable regulatory environment.

Regulatory Challenges and Advocacy

State Street has expressed concerns about the SEC’s proposed Staff Accounting Bulletin 121 (SAB 121), which imposes significant capital requirements on banks holding customer crypto assets. The bank has advocated for changes to SAB 121 to reduce these burdens. Donna Milrod, State Street’s chief product officer and head of Digital Asset Solutions, emphasized that while the focus is currently on tokenization, the goal is to eventually offer digital custody services as well.

Taurus’s Role and Industry Impact

Taurus, based in Switzerland, will support State Street in this endeavor. Co-founder and managing partner Lamine Brahimi highlighted the potential positive impact of this partnership on the U.S. financial markets, which have lagged behind European markets due to current regulatory constraints.

Previous Engagements and Future Prospects

State Street has a history of engagement with blockchain technology, previously collaborating with crypto custody firm Copper. However, Copper has since shifted its focus to its ClearLoop settlement system, underscoring the evolving landscape of digital asset services.

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Babylon’s Mainnet Launch Scheduled for August 22

Bitcoin staking platform Babylon, spearheaded by Stanford University professor David Tse, is set to begin the phased launch of its mainnet this week. The project aims to introduce staking functionality to Bitcoin, a feature traditionally absent from the largest cryptocurrency network. The initial phase of the launch will commence on August 22, allowing BTC holders to lock their tokens on the network.

Funding and Support

Babylon secured $70 million in funding from Paradigm earlier this year, underscoring strong investor confidence. The project is backed by over 200 “finality providers,” including notable entities such as Allnodes, Figment, and Galaxy Digital. These providers will approve transactions and ensure the smooth operation of Babylon’s protocol, akin to the role of validators in proof-of-stake blockchains.

Staking Details and Security Measures

During the first phase, users can stake a total of up to 1,000 BTC ($57.9 million) on the Babylon platform. Staking, which involves locking tokens to support network operations and earn rewards, is a common practice in many blockchains but has not been available for Bitcoin until now. Babylon aims to bridge this gap and enhance Bitcoin’s utility.

Project Leadership and Vision

David Tse, known for his research in information theory and previously associated with UC Berkeley, leads Babylon. His expertise brings a promising perspective to scaling Bitcoin’s capabilities.

Market Impact and Future Prospects

Babylon’s introduction of staking could mark a significant shift in Bitcoin’s functionality, adding new dimensions to its ecosystem and potentially attracting more utility and investment in the network.

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Bitcoin and the broader cryptocurrency market are experiencing significant losses in August, despite a rebound in global stocks and other asset classes. The largest digital asset has fallen approximately 9% this month, underperforming compared to MSCI Inc.’s world share index, which has gained nearly 1%, and a surge in gold prices to record highs. A Bloomberg global bond gauge has increased by nearly 2% over the same period.

Challenges for Bitcoin and Crypto Market

Analysts point to potential sales of Bitcoin seized by the US government as a key challenge for digital assets. The US government is estimated to hold roughly $12 billion worth of crypto, and recent blockchain data shows that $600 million of confiscated Bitcoin was moved to a Coinbase Global Inc. wallet last week, according to Arkham Intelligence. Khushboo Khullar, a venture partner at Lightning Ventures, attributes the current downward pressure on Bitcoin prices to these potential sales, though she anticipates this impact will be temporary.

Market Volatility and Speculative Sentiment

The top 100 digital assets index saw its steepest drop on August 5 since November 2022, aligning with a broader market retreat amid US growth concerns and unwinding yen carry trades. While expectations for the US economy have stabilized, leading to a near-record high in MSCI’s global share index, crypto market sentiment remains weak. Funding rates for Bitcoin perpetual futures on the Binance exchange—often used by speculators—are at their most negative since 2022, reflecting diminished enthusiasm among fast-money traders.

Political and Policy Uncertainties

Bitcoin’s peak of $73,798 in March was driven by expectations of looser US monetary policy and inflows into dedicated US exchange-traded funds (ETFs). However, interest in these ETFs has cooled in recent months. Additionally, the ongoing US presidential race, with pro-crypto Republican Donald Trump and Democratic opponent Vice President Kamala Harris, has introduced further uncertainty. Harris has yet to outline her stance on digital assets.

As of Monday afternoon in New York, Bitcoin has dipped 2% to around $58,600, with other major tokens such as Ether and Solana also experiencing declines.

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Bitwise Asset Management, a prominent cryptocurrency ETF provider, has acquired London-based digital asset issuer ETC Group. This acquisition will elevate Bitwise’s assets under management (AUM) to $4.5 billion, according to a company press release. ETC Group, known for its physically-backed Bitcoin fund, contributes approximately $1.1 billion in AUM to the deal.

Strategic Expansion and Global Reach

San Francisco-based Bitwise, which introduced a spot Bitcoin ETF in the U.S. earlier this year, manages seven ETFs with a total AUM of $2.7 billion. Bitwise CEO Hunter Horsley noted that the acquisition will help the company improve its offerings for European investors and expand its global footprint. Horsley emphasized that the acquisition will enable the company to better serve European investors, provide global insights, and expand its product range.

The addition of ETC Group provides Bitwise with access to a European market where crypto-exchange traded products have been established for some time, contrasting with the U.S. market where spot Bitcoin ETFs only recently received regulatory approval in early 2024.

Industry Trends and Recent Deals

The acquisition aligns with a broader trend of consolidation in the ETF industry. Recent deals include Valkyrie Investments selling its ETF business to CoinShares and Ark Investment Management acquiring Rize ETF Limited. Specific terms of the Bitwise-ETC Group deal were not disclosed, but the acquisition will integrate ETC Group’s range of crypto-focused exchange-traded products under the Bitwise brand.

Since its launch on January 11, the Bitwise Bitcoin ETF (BITB) has seen approximately $2 billion in inflows, making it the fourth most popular among the 11 SEC-approved products this year, as reported by U.K. asset manager Farside Investors.

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The U.S. government has recently transferred nearly $600 million worth of Bitcoin (BTC), seized from the Silk Road dark web marketplace, to a wallet associated with Coinbase Prime. This transfer involved 10,000 Bitcoin and was reported by Arkham Intelligence.

Market Impact and Speculation

The purpose of this transfer—whether to sell or hold the assets—remains unclear. This move follows a previous transfer of approximately $2 billion in Silk Road Bitcoin in late July. Since then, Bitcoin’s price has seen a dip, trading around $58,461, marking a 3.9% decrease in the past 24 hours.

Such significant transactions often attract investor attention and spark speculation about their potential impact on the market. The U.S. Marshals Service recently awarded Coinbase Prime a contract to manage and dispose of large-cap cryptocurrency assets, suggesting that the government may be relocating these assets for custody purposes rather than immediate sale.

Historical Context and Future Proposals

The Silk Road marketplace, which was shut down in 2014, was known for facilitating illegal transactions using cryptocurrencies like Bitcoin. Over the years, U.S. authorities have sold portions of the seized Bitcoin from this marketplace.

In related news, U.S. Presidential hopeful and Republican candidate Donald Trump has proposed creating a “strategic Bitcoin reserve” if elected. Trump has stated plans to retain all Bitcoin currently owned by the U.S. government, emphasizing his commitment to leveraging the cryptocurrency for strategic purposes.

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Coinbase has announced the launch of cbBTC, a wrapped version of Bitcoin, on its Base network. This strategic move aims to broaden Coinbase’s tokenized asset portfolio and could potentially transform the wrapped Bitcoin landscape.

Although specific details about cbBTC are yet to be revealed, the introduction of this new asset comes in response to the increasing demand for tokenized Bitcoin on Ethereum-compatible chains. Coinbase’s previous success with cbETH, a wrapped Ethereum token launched in August 2022, sets a promising precedent. With approximately 210,000 cbETH tokens in circulation, it has gained significant adoption and traction.

Jesse Pollak, the lead developer on Base, expressed his enthusiasm for the potential of Bitcoin on Coinbase’s layer-2 network, stating: “I love Bitcoin, am so grateful for its role in kickstarting crypto, and we’re going to build a massive Bitcoin economy on @base.”

Market Impact and Transparency

Blockchain expert Anndy Lian sees cbBTC as an opportunity for Coinbase to provide a transparent alternative to Wrapped Bitcoin (WBTC). Recent developments in the WBTC space have raised concerns due to Justin Sun’s involvement. BitGo, the company behind WBTC, recently partnered with BiT Global, which is associated with Sun. Sun has clarified his role, stating he does not control WBTC reserves. Despite these assurances, WBTC remains the largest wrapped Bitcoin asset with a market capitalization of $9 billion.

The introduction of cbBTC could offer a new level of transparency and trust in the wrapped Bitcoin market, addressing ongoing concerns and potentially reshaping market dynamics.

Looking Ahead

As Coinbase continues to innovate with new tokenized assets, cbBTC represents a significant step forward in the evolution of wrapped Bitcoin. The launch of cbBTC on the Base network not only expands Coinbase’s offerings but also highlights its commitment to advancing the crypto ecosystem with secure and transparent solutions.

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Bitso, a leading cryptocurrency exchange in Latin America, has teamed up with Coincover, a prominent blockchain protection company, to bolster its digital asset security. This partnership aims to provide comprehensive protection for Bitso’s clients’ funds against potential threats such as hacking or loss of access.

Coincover’s integration with Bitso’s multi-party computation (MPC) infrastructure offers a robust, non-custodial disaster recovery solution. This collaboration ensures that Bitso can swiftly regain access to its systems in the event of a technical or operational failure. Additionally, Bitso will utilize Coincover’s Risk Engine to enhance its risk mitigation capabilities. This advanced tool evaluates outgoing transactions in real time, identifying and addressing security threats to complement Bitso’s existing fraud protection measures.

Addressing Rising Security Concerns

The need for heightened security in the cryptocurrency sector is underscored by recent data, which shows that losses from crypto-related incidents surged to $572 million in Q2 2024, a significant increase from $220 million in the same period the previous year. Notably, hacking of centralized exchanges accounted for 70% of these losses. With more than half (50.3%) of Latin American investors using cryptocurrencies primarily as a savings tool, efficient handling of security threats is crucial for exchanges in the region.

Strengthening Trust and Market Position

The partnership with Coincover reinforces Bitso’s reputation as a security-focused exchange, going beyond the minimum legal standards to ensure the safety of its customers’ funds. For Coincover, this collaboration marks a significant step into the Latin American market.

Nano Rodriguez, Head of Strategic Alliances at Bitso, stressed that with the company’s growth and service expansion, ensuring the safety and security of customer digital assets is paramount. The collaboration with Coincover strengthens their commitment to providing a secure and reliable platform. This partnership allows Bitso to deliver outstanding protection and peace of mind, positioning it as the leading cryptocurrency exchange in Latin America.

Digby Try, Senior Vice President at Coincover, highlighted that blockchain protection is a critical need for crypto firms, not merely an optional benefit. He pointed out that Latin America has the highest preference for centralized exchanges among crypto users worldwide, signaling the region’s industry expansion. However, this growth also means these exchanges face increased risks of hacks and scams. The collaboration with Bitso is designed to offer premier asset protection to customers and marks a significant step in their effort to boost trust, confidence, and security in the crypto sector.

About the Partnership

The collaboration between Bitso and Coincover is designed to provide advanced security measures and build greater confidence in the cryptocurrency market. This partnership highlights the growing importance of robust security solutions in protecting digital assets and enhancing the overall user experience in the crypto industry.

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Financial services industry consultant John Reed Stark has raised concerns about Morgan Stanley’s recent move to permit its wealth advisors to recommend spot Bitcoin ETFs to clients. Stark, president of a consulting firm based in Bethesda, Md., warned that this decision could invite substantial regulatory scrutiny. In a post on X, Stark suggested that Morgan Stanley’s action might trigger what could be “the largest SEC and FINRA examination sweep in history,” given that the firm’s 15,000 advisors will now be able to solicit clients for select spot Bitcoin ETFs.

Diverse Opinions on Bitcoin ETFs

Morgan Stanley’s decision to allow advisors to offer two of the nine existing spot Bitcoin ETFs—the $9.7 billion Fidelity Wise Origin Bitcoin Fund (FBTC) and the $19 billion iShares Bitcoin Trust (IBIT)—has sparked debate. Advisors will only offer these ETFs to clients with at least $1.5 million in investable assets. Critics like Eric Balchunas, senior ETF analyst at Bloomberg Intelligence, question Stark’s position, noting that Stark has been consistently skeptical of cryptocurrencies. Balchunas argues that Stark’s concerns lack specifics on how advisors might face trouble.

On the other hand, some experts, such as Svetlin Krastev, founder of Black Sea Gold Advisors, believe that since spot Bitcoin ETFs have already undergone extensive regulatory scrutiny, further unique oversight is unlikely. Krastev contends that offering an SEC-approved product should not invite additional regulatory challenges.

Potential for Increased Regulatory Oversight

Noah Damsky, principal at Marina Wealth Advisors, expresses concerns that market volatility could prompt regulators to target Bitcoin ETFs as “low-hanging fruit.” Damsky points out the significant price swings in Bitcoin, noting that last week, Bitcoin fell 6% while the Nasdaq dropped 3%. This volatility raises concerns about the suitability of such investments for the average investor.

Adam Gana, a New York-based securities lawyer with Gana Weinstein, also foresees potential issues. Gana predicts increased arbitration cases as Bitcoin becomes more accessible to Main Street investors and cautions that the industry might look back critically at this move in the future.

Ric Edelman, founder of the Digital Assets Council of Financial Professionals, countered Stark’s claims, emphasizing that financial advisors should not be deterred by Stark’s criticisms. Edelman asserts that Stark’s views are biased and advises advisors to focus on serving their clients’ best interests, despite Stark’s warnings.

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The U.S. Securities and Exchange Commission (SEC) has filed a lawsuit against cryptocurrency company NovaTech and its co-founders, Cynthia and Eddy Petion, alleging that they orchestrated a fraudulent scheme that amassed over $650 million from more than 200,000 investors globally, including a significant number of Haitian-Americans. The SEC alleges that NovaTech and the Petions falsely assured investors of the safety of their funds, with Cynthia Petion promising profits “from day one.”

Details of the Alleged Scheme

According to the SEC, the Petions used new investor funds primarily to repay earlier investors and pay commissions to promoters, while diverting millions of dollars for their benefit. The fraudulent scheme reportedly lasted four years, ending with NovaTech’s collapse in May 2023. The lawsuit, filed in Miami federal court, follows a similar lawsuit from New York Attorney General Letitia James, who had previously estimated the fraud at over $1 billion.

The regulators accuse NovaTech of exploiting victims’ religious beliefs through social media, Telegram, WhatsApp, and even in Haitian Creole, with Cynthia Petion portraying herself as “Reverend CEO” and claiming NovaTech was “God’s vision.” Both the SEC and state regulators have labeled the scheme as a pyramid scheme, where new investments are used to pay returns to earlier investors and recruit more participants.

The SEC has also charged six NovaTech promoters with fraud, accusing them of continuing to recruit investors despite obvious warning signs, such as delayed withdrawals and regulatory scrutiny in the U.S. and Canada. One promoter, Martin Zizi, has agreed to a $100,000 civil fine.

Both the SEC and state lawsuits seek restitution for victims and civil penalties. The case is filed as SEC v. Nova Tech Ltd., U.S. District Court, Southern District of Florida, No. 24-23058.

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