Author: Faith Yakubu

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Marathon Digital Holdings Inc. (NASDAQ:MARA)

Marathon Digital Holdings Inc. has announced plans to sell $250 million in convertible senior notes, with the proceeds earmarked for acquiring additional Bitcoin. This move aligns with a strategy similar to that of MicroStrategy Inc., which has been increasing its Bitcoin holdings over the years in anticipation of a rise in cryptocurrency prices.

Strategic Moves and Market Impact

Marathon Digita, the largest Bitcoin miner in the U.S., is among several public mining companies that have resumed accumulating Bitcoin following the April ‘halving’ event, which reduced mining revenue. In 2022, many miners had been liquidating their Bitcoin reserves to manage high energy costs and industry challenges. The ‘holding’ strategy, as it’s known in the crypto world, could enhance the market presence of public mining companies as leveraged proxies for Bitcoin prices and potentially boost their stock prices, according to Ethan Vera, Chief Operating Officer at Luxor Technology.

The issuance of convertible notes also introduces the risk of dilution for existing shareholders. On Monday, Marathon’s shares fell by up to 12% to $15, reflecting a 34% drop in stock value for the year, despite Bitcoin’s 40% gain over the same period. As of July 31, Marathon held 20,818 Bitcoin and had a total of $1.6 billion in cash and digital assets. The company reported a nearly $200 million net loss for the second quarter, primarily due to a writedown on its digital asset holdings.

The convertible notes, set to mature in 2031, will be offered in a private placement to institutional investors.

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Top NFT Collections Drive Significant Sales

On August 11, DMarket dominated the non-fungible tokens (NFTs) market with an outstanding sales figure of $733,528, according to CryptoSlam data. DMarket, an NFT collection featuring in-game items from popular games such as Counter-Strike and Dota 2, outperformed other collections that day. The Mythos-based collection has achieved an all-time sales volume of $485.22 million, ranking it as the 14th largest collection in the NFT industry.

Other Leading NFT Collections and Blockchain Performance

The second-highest NFT collection for the day was Guild of Guardians Heroes on the Immutable blockchain, with a daily sales volume of $531,721, down slightly from the previous day’s $591,119. The Polygon-based Kgirl collection secured the third position with daily sales of $475,659. Solana NFTs filled the fourth and fifth spots, with DeGods achieving $332,921 and the DogeZuki Collection securing $311,838 in sales.

Despite DMarket’s leading position in sales, the Mythos blockchain did not top blockchain sales rankings. On Sunday, Ethereum emerged as the leading blockchain with $2.7 million in sales, while Solana followed with $1.94 million. Notably, last Thursday, Mythos led all blockchains in sales, with DMarket topping the Ethereum network.

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Hedge funds and institutional traders are aggressively buying back into cryptocurrency call options following one of the most significant sell-offs of bullish positions this year. This renewed interest comes after a weekend liquidation event that saw about $1.1 billion wiped out from crypto bets.

On August 4, Bitcoin fell as much as 17% and Ether lost over 20% of its value, marking one of the worst market downturns of 2024. The sell-off, which started during Asian trading hours, resulted in roughly 50% of open interest in crypto derivatives being liquidated, according to Yevgeniy Feldman from SwapGlobal.

Despite this downturn, Hedge Funds traders are re-entering the market with optimism. They are particularly focused on buying call options that allow them to purchase Bitcoin at strike prices of $90,000 and above later this year. This rebound is reflected in increased demand for Bitcoin on platforms like Coinbase Global Inc., where the bid-to-offer ratio indicates strong buying interest at lower levels.

Short-term hedging has surged on offshore exchanges, with a higher put-to-call ratio observed on Deribit. Retail investors, who frequently use these platforms, are buying more puts as a hedge against further price declines. Conversely, U.S. institutional investors, who typically use over-the-counter (OTC) desks, have shown a bullish bias for the latter part of the year.

The most popular options currently are September $90,000 calls, December $100,000 calls, and March $100,000 calls, which together hold nearly $1 billion in notional value. Bitcoin’s price was around $56,850 on Tuesday, showing a 4.5% increase.

The optimism for a bullish end to the year is partly driven by political factors, including the potential re-election of Donald Trump, a known crypto supporter. As Hedge funds traders look to capitalize on a potential market rebound, the landscape remains volatile but promising for those with a long-term bullish outlook.

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Bitcoin (BTC-USD) has faced a significant pullback, plunging as much as 20% over the weekend to below $50,000—a level not seen since February. However, the cryptocurrency has since rebounded by approximately $6,000, though it remains down 14% over the past week.

Despite this downturn, Bitcoin enthusiasts are maintaining their bullish forecasts. MarketVector’s Martin Leinweber believes that Bitcoin could surpass its previous all-time high of $74,000, potentially reaching between $80,000 and $100,000 by the end of 2024. Onramp Bitcoin’s Mark Connors also reaffirmed his earlier prediction of Bitcoin hitting $110,000 in 2024.

Bitwise Asset Management’s Matt Hougan echoed the optimism, emphasizing that Bitcoin investors are long-term holders, resistant to short-term market fluctuations.

Skeptics, however, have raised concerns about Bitcoin’s performance as a haven asset. Critics argue that Bitcoin’s recent behavior mirrors that of risk assets like technology stocks, challenging its narrative as an uncorrelated store of value.

The recent market correction appears to be linked to broader financial movements, including shifts in the US dollar’s strength relative to the Japanese yen. Additionally, Bitcoin ETFs experienced significant net outflows of $168 million on Monday, with trading volumes doubling compared to previous days.

Fundstrat Global Advisors remains confident, projecting Bitcoin could reach $126,000 in 2024. They view the recent decline as a minor setback rather than a market peak.

As Bitcoin continues to experience volatility, market participants will be closely watching trading flows and the impact of new Bitcoin exchange-traded funds managed by major Wall Street firms.

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Core Scientific (NASDAQ:CORZ) saw its shares spike as much as 17% following the announcement of a new $2 billion high-performance computing (HPC) contract with CoreWeave. The extension of a prior agreement will see Core Scientific host an additional 112 megawatts (MW) of GPUs for CoreWeave, an AI hyperscaler firm. This deal boosts Core Scientific’s expected total revenue from the contract to $6.7 billion, starting in the first half of 2026.

CoreWeave will cover all capital expenditures necessary to upgrade Core Scientific’s existing infrastructure for HPC use. This new deal follows an earlier agreement to provide 200MW of GPU hosting, with subsequent expansions adding 70MW, and now this third extension.

The agreement highlights Core Scientific’s strategic advantage in leveraging its existing infrastructure for HPC and AI needs, which require high-energy data centers. This is a growing market opportunity as demand for advanced data center infrastructure increases.

Core Scientific has also secured options for further contract extensions to host an additional 118MW for HPC computing, underscoring its role in meeting the energy-intensive demands of modern computing.

The company’s ability to adapt its mining infrastructure to support high-performance and AI data centers is seen as a key factor in its current market performance, given the challenges faced by the crypto mining sector amid a prolonged bear market.

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Solana, Altcoins, and Memecoins Experience Sharp Declines

The cryptocurrency market is in turmoil, with altcoins facing severe losses. Over the past week, Solana (SOL-USD), Chainlink (LINK-USD), and Uniswap (UNI-USD) have all dropped 30%, according to CoinGecko data. Memecoins have also been hit hard, with Dogecoin (DOGE-USD) down 27% and Pepe (PEPE-USD) plummeting 39%.

Crypto Liquidations and ETF Outflows

In the past day alone, traders have liquidated over $1.23 billion worth of cryptocurrencies, as reported by CoinGlass. Bitcoin (BTC-USD) exchange-traded funds saw $237.4 million in outflows on Friday, marking the third-worst trading day since the spot ETFs began in January.

Reasons Behind the Crypto Market Downturn

The current crypto market decline is closely tied to the recent stock market meltdown. Since Wednesday, the S&P 500 (SPX) has fallen 5.5%, and the Nasdaq Composite (IXIC) has dropped 8%. The VIX Index (VIX), which measures stock market volatility, surged by one-third to over 65 points on Monday, the highest level since the early pandemic days.

Cryptocurrencies, known for their volatility, often experience significant price swings during times of broader market uncertainty. For instance, Bitcoin recently fell 11% in a single day due to waning interest rate hopes, despite rallying on better-than-expected inflation data in mid-May. “Reminder: Crypto is an important hedge against the global economy. When stocks are down 2%, crypto is down 20%,” noted one X user.

With their smaller market caps, meme coins are among the most volatile assets in the crypto space. Bitcoin, as the largest cryptocurrency by market cap, has seen a 20% drop over the past week, which is substantial but still less severe compared to memecoin losses. “Memecoins are the highest risk and highest reward part of the industry, known for their wild price swings. They act as the canaries in the coal mine,” said Jonathan Bixby, Chairman of Phoenix Digital Assets.

Stock Market Volatility Factors

The stock market’s recent volatility can be attributed to several factors. Tech stocks, which have driven market gains this year due to AI-related investments, are showing signs of a potential bubble burst. Disappointing earnings reports have fueled concerns about tech companies’ ability to generate returns. On Monday, Nvidia (NVDA) fell 6.5%, while Apple (AAPL) saw a 4.29% decline.

Macroeconomic factors are also contributing to market instability. The Bank of Japan recently raised interest rates for the first time in 17 years due to concerns about the Yen’s declining purchasing power against the U.S. Dollar. This move has led to a rise in the Yen and a significant drop in the Nikkei Index (N225), which fell 12% on Monday, the largest decline since 1987. This has forced investors to unwind the Yen carry trade, negatively impacting the U.S. stock market.

Additionally, disappointing job data has exacerbated market concerns. The Bureau of Labor Statistics reported a July increase of 114,000 jobs, falling short of the 175,000 expected. Revisions to previous months’ gains and a rise in the unemployment rate to 4.3% from 4.1% have added to the negative sentiment.

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Bitcoin (BTC-USD) briefly fell below $50,000 on Monday for the first time since February, marking a significant drop of nearly 30% from the $70,000 price level reached a week ago. The cryptocurrency later rebounded, trading above $54,000 early Monday afternoon. This sharp decline comes as fears surrounding the U.S. economy have extended the market sell-off from equities to cryptocurrencies, resulting in approximately $1.2 billion in crypto liquidations over the past 24 hours.

Impact on Bitcoin ETFs, Altcoins, and Crypto Stocks

The turmoil has extended to bitcoin ETFs and other crypto assets. Investors pulled $237.4 million from spot bitcoin ETFs on Friday, according to Farside Investors. Alternative cryptocurrencies have experienced even steeper declines, with Ether (ETH-USD) falling 24% over the past week and Solana (SOL-USD) down 28%.

Crypto-related stocks also suffered significant losses. Shares of MicroStrategy Incorporated (NASDAQ:MSTR), a major corporate bitcoin holder, dropped 9%. Block, Inc. (NYSE:SQ) and Coinbase Global, Inc. (NASDAQ:COIN) saw declines of 2% and 5%, respectively. Bitcoin mining stocks were also affected, with Cleanspark, Inc. (NASDAQ: CLSK) falling 11%, Hut 8 Mining Corp (NASDAQ:HUT) down 7%, Marathon Digital Holdings, Inc. (NASDAQ:MARA) declining 5%, and Riot Platforms, Inc. (NASDAQ:RIOT) falling 3%.

Historical Context and Long-Term Outlook

Large price drawdowns are not unusual for Bitcoin during bull markets, especially following halving events such as the recent one in April. Despite its intended role as a haven asset, bitcoin’s recent sell-off alongside the equities market suggests it continues to act as a risk-on asset amid global market uncertainty.

However, some long-term bitcoin proponents remain optimistic. Bitwise Chief Investment Officer Matt Hougan noted on X (formerly Twitter) that while sell-offs are common during market panics, they contribute to the long-term narrative for Bitcoin.

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Bitcoin mining is often perceived merely as a digital gold rush, yet it is an advanced technological and energy-integrative industry. In a recent discussion with Roundtable anchor Rob Nelson, and Robert Samuels, Vice President of Investor Relations at Marathon Digital Holdings Inc. (NASDAQ:MARA), it was revealed that bitcoin mining is not just a tech sector play but a transformative force in the energy field.

Nelson highlighted the unique position of Bitcoin mining within the tech industry, underscoring that these companies operate at the intersection of advanced technology and energy efficiency. Samuels concurred, noting that mining operations are high-tech ventures capable of dynamic interaction with power grids.

A key point of discussion was Bitcoin miners’ ability to manage power flow efficiently. Nelson pointed out that this capability allows the industry to incentivize energy in areas underserved by traditional utilities. Samuels expanded on this, explaining that Marathon Digital can activate or deactivate its mining operations instantaneously, providing a flexible energy solution that benefits both the company and the community.

Looking forward, the integration of Bitcoin miners into the broader energy infrastructure is promising. Nelson inquired about the potential for future collaboration between bitcoin miners and utilities. Samuels shared insights into Marathon’s innovative projects, such as their pilot initiative in Finland, where they use Bitcoin miners to heat thousands of homes. This project illustrates how mining companies can convert stranded energy sources, such as methane gas, into valuable resources, establishing them as key players in energy infrastructure.

The discussion also touched on the future role of Bitcoin mining in the context of emerging technologies like AI. Nelson raised concerns about the growing electricity demands of AI and questioned the long-term role of Bitcoin mining. Samuels acknowledged the finite supply of bitcoins as a potential limiting factor but suggested that transaction fees and alternative uses for the heat generated by mining operations could sustain the industry.

Marathon Digital envisions a future where mining represents only half of its business. Samuels explained that as the industry evolves, Marathon aims to play a significant role in the global energy transformation. Their projects reflect a commitment to using mining technology to support energy needs on both a national and international scale.

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DraftKings Inc. (NASDAQ:DKNG) is shutting down its non-fungible token (NFT) business “effective immediately,” as announced in an email to customers. This move marks the end of a notable intersection between digital collectibles and sports culture for the sports gambling giant.

The company cited recent legal developments as the primary reason for the discontinuation of Reignmakers and its NFT Marketplace. The decision, as stated in the email, follows a federal judge’s ruling allowing a class action lawsuit against DraftKings to proceed. The lawsuit alleges that DraftKings’ NFTs could be considered unregistered securities, according to Westlaw.

DraftKings entered the NFT space in mid-2021, driven by the popularity of digital collectibles among its customer base. Co-founder Matt Kalish highlighted in a podcast from Ark Invest that the company saw significant potential in NFTs, particularly after observing the success of projects like NBA Top Shot. The company built its NFT business on the Polygon network and launched a Tom Brady-themed collection that quickly sold out.

Despite a drop in interest for basic NFTs by 2022, DraftKings continued to invest in the space through Reignmakers, a fantasy sports game utilizing NFTs. Kalish noted on the Ark podcast that the game captured elements beloved by DraftKings users, such as day trading and fantasy gaming. The initial success led the company to expand Reignmakers from football to include UFC and PGA.

This year, DraftKings faced legal challenges, with class action lawsuits alleging that its NFT sales violated securities laws. Other sports-themed NFT companies have also encountered similar issues, with NBA Top Shot settling its legal dispute with a $4 million payout in June.

The class action against DraftKings is progressing toward a trial, according to court records. As part of the NFT shutdown, DraftKings is offering buyouts to Reignmakers players. NFT collectors will still have access to and the ability to transfer their collections.

Joel Belfer, who runs the Mint Condition blog on sports collectibles, commented on the situation, emphasizing the importance of legal diligence for companies entering the NFT and collectibles space. He noted that DraftKings’ experience is a reminder of the potential legal challenges and risks associated with the market.

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Bitcoin led the investment charge last week, accumulating over $1.97 billion in inflows, while Ether experienced its strongest week since March, attracting nearly $70 million in inflows.

Expectations are mounting among some traders regarding continued buying activity in Ether-tracked products, with projections of the asset reaching the $10,000 price level by 2024.

In a report released on Monday, asset manager CoinShares revealed that crypto investment products amassed nearly $2 billion in inflows last week, extending a five-week streak to over $4.3 billion.

Trading volumes in exchange-traded products (ETPs) surged to $12.8 billion for the week, marking a 55% increase from the previous week. Bitcoin dominated the investment landscape, attracting over $1.97 billion in inflows, while Ether witnessed its strongest week of inflows since March, totaling nearly $70 million.

Buying activity for spot bitcoin exchange-traded funds (ETFs) in the U.S. has surged since mid-May, following a lackluster period in April characterized by days of zero net inflows across all products. Notably, BlackRock’s IBIT, one of the major products, even experienced outflows during this time. However, inflows have since rebounded, with IBIT emerging as the largest bitcoin ETF last week, accumulating over $20 billion worth of the asset since its January issuance.

CoinShares analyst James Butterfill noted that inflows were observed across almost all providers, with a continued slowdown in outflows from established players. Positive price action propelled total assets under management (AuM) above the $100 billion mark for the first time since March this year.

Butterfill suggested that the surge in Ether buying was likely spurred by the SEC’s surprise decision to greenlight spot ether ETFs.

Traders anticipate continued inflows into Ether products in the coming months, with a rally expected towards the end of the year. Ed Hindi, Chief Investment Officer at Tyr Capital, believes that $5-10 billion of fresh capital could flow through Ether products in the short to medium term, potentially fueling a year-end rally in ETH and its ecosystem to new record highs. Hindi considers a price target of $10,000 in 2024 as reasonable, especially given Ether’s transition to a deflationary asset.

In May, the U.S. Securities and Exchange Commission (SEC) approved key regulatory filings tied to ETH ETFs, marking a historic milestone for the second-largest cryptocurrency. The approval covered documents for eight ETFs from various providers, including VanEck, Fidelity, Franklin, Grayscale, Bitwise, ARK Invest 21Shares, Invesco Galaxy, and BlackRock, for listing on major exchanges.

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