Category: Cryptocurrency

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Long-term bitcoin holders and miners have been significant sellers in the past two weeks, with little sign of renewed demand, according to on-chain analysis firm CryptoQuant in a report shared with CoinDesk.

CryptoQuant’s data shows that whales—large holders of bitcoin—sold over $1.2 billion worth of BTC recently, likely through brokers rather than on the open market.

“Traders are not increasing their Bitcoin holdings, and large holders’ (whales) demand growth is still lacking strength,” analysts noted. “Stablecoin liquidity has continued to slow, growing at its slowest pace since November 2023.”

These traders have been reducing their holdings since BTC prices peaked over $70,000 in late May, as indicated by declining UTXO age bands tracked by CryptoQuant.

Unspent Transaction Outputs are created in every Bitcoin transaction and are used by traders to analyze buying and selling patterns. A decrease in UTXO age usually signals increased Bitcoin activity and selling, while an increase suggests more holding.

Market observers suggest that miners are shifting focus to the booming artificial intelligence sector, leading to the sale of their bitcoin rewards. Both the AI and cryptocurrency sectors rely heavily on powerful computing chips.

“One of the biggest trends since Bitcoin halving this year is that miners are increasingly moving towards the AI business,” shared Lucy Hu, senior analyst at Metalpha, a crypto fund, in a Telegram message. “The reduction in mining rewards has pushed miners to explore other revenue streams. With AI firms needing energy-intensive data centers, Bitcoin miners are boosting revenue through sales to AI companies.”

Since June 5, BTC prices have dropped from $71,000 to just over $65,000 as of Wednesday, influenced by a strong dollar, a shift away from riskier assets, and growth in traditional stock indices. Additionally, U.S.-listed exchange-traded funds tracking Bitcoin recorded net outflows of over $600 million last week, marking their worst performance since late April.

Some traders have warned that BTC could fall to as low as $60,000 without new growth catalysts.

Currently, BTC is down 0.6% in the past 24 hours, according to CoinDesk data. Meanwhile, the CoinDesk 20, an index of the largest tokens, is up 1.2%.

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Bullish bets on Dogecoin futures suffered significantly on Monday, with liquidations totaling $60 million as the meme token’s price dropped over 10% before a brief recovery. This decline occurred alongside a sell-off in major tokens, including Bitcoin, during Asian trading hours. The CoinDesk 20 Index, which tracks the broader crypto market, fell by 3.4% in the past 24 hours.

Bitcoin long positions lost $47 million, while Ether bullish bets were the hardest hit, losing $76 million. In total, crypto long positions saw liquidations exceeding $440 million due to profit-taking and a strengthening dollar, according to traders on Tuesday.

“The meme coin market has generally pulled back this month as Bitcoin prices come under pressure,” stated Lucy Hu, a senior analyst at Metalpha. “The expectation of a rate cut by the Fed has led investors to shift from risky assets to safer ones, impacting DOGE as one of the largest meme coins in the market.”

Data from Coinanlyze reveals that nearly all DOGE liquidation activity over the past 24 hours came from long positions, with only about $600,000 worth of short positions being liquidated. These figures represent the highest for DOGE futures since May 2021, with over $44 million of the liquidations occurring on Huobi, a crypto exchange favored by Asia-based traders.

Open interest, or the total number of unsettled futures bets, dropped 16% to $600 million. Additionally, a long-short ratio tracking DOGE futures indicated a bearish sentiment, standing at 0.94, suggesting traders are positioning for further declines.

Liquidation occurs when an exchange forcefully closes a trader’s leveraged position due to partial or total loss of the trader’s initial margin. This happens when a trader cannot meet the margin requirements for a leveraged position, meaning they lack sufficient funds to keep the trade open.

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Recent spikes in Google search queries related to cryptocurrencies have often signaled major market peaks, aligning with Warren Buffett’s advice to buy in doom and sell in boom. This pattern now appears in the market for AI-related tokens.

Tokens like FET, RNDR, TAO, and GRT have seen their market value drop by up to 30% over the past week, according to data from Coingecko. Concurrently, Google Trends indicates that search interest in artificial intelligence has likely peaked.

FET ranks as the fourth-worst performing among the top 100 cryptocurrencies in the past seven days. In contrast, Bitcoin fell just 2.8% during the same period, while the broader CoinDesk 20 Index declined by 6%.

Google Trends, often used to gauge retail investor interest in trending topics, shows that the search query “AI” reached its highest value of 100 last week—the peak in the past five years. This score represents the maximum search volume for the query within a given timeframe.

This surge in AI interest suggests that public excitement has reached a new high, drawing more retail investors into the market. Nvidia (NASDAQ:NVDA), a leading AI chipmaker, has also seen increased attention alongside AI trends.

Although indicative, Google Trends can serve as a valuable tool to watch, as retail investors often act based on emotions and are usually the last to enter bull markets and the first to exit bear markets. For instance, spikes in searches for Bitcoin and Solana coincided with their respective price peaks in May 2021 and November 2021.

It’s important to note that Bitcoin, which has a strong positive correlation with Nvidia, bottomed out with tech stocks in late 2022 following the launch of ChatGPT, which heightened general awareness of artificial intelligence. GMO’s Chief Investment Strategist Jeremy Grantham has noted that the AI rally might be a bubble within a bubble, potentially on the verge of bursting.

This insight may encourage investors to exercise caution when making investment decisions.

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Sonic, a gaming-focused layer-2 blockchain built on Solana, has successfully raised $12 million in a recent funding round. The Series A round was led by Bitkraft and included investments from Galaxy Interactive and Big Brain Holdings.

The funds will be allocated to expanding the Sonic protocol, which features game development tools tailored for the Solana ecosystem. According to the press release, Sonic offers “built-in mechanisms designed specifically for game development and execution on Solana, such as a sandbox environment, customizable gaming primitives, and extensible data types, all while providing the fastest on-chain gaming experience.”

Sonic was developed by Mirror World Labs, a two-year-old infrastructure company led by CEO Chris Zhu. Zhu, who graduated from New York University in 2020 and previously worked for ByteDance, the parent company of TikTok, has been pivotal in driving Sonic’s growth.

“We expect the Sonic SVM to become the go-to destination for any gaming studio that wants to build games within the Solana ecosystem,” said Justin Swart, principal at Bitkraft, in the press release.

This latest fundraising round follows an earlier $4 million seed round in 2022, bringing the total funds raised to $16 million.

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The layer-2 blockchain  has launched its much-anticipated airdrop of the ZK token, with 45% of the tokens claimed within the first two hours, according to the ZKsync Association. This non-profit organization, created by Matter Labs, oversees the airdrop process.

“It’s a Monday, don’t you have work?” the ZK Nation X account tweeted, noting the rapid claim rate. The ZK token opened at $0.31 but has since decreased by 21%, trading at $0.24 according to CoinGecko. The market capitalization is approximately $908 million based on the circulating supply, with about 3.7 billion tokens eligible for distribution. The fully diluted market cap would be $5.1 billion.

The ZK token is listed on cryptocurrency exchanges Binance, Bybit, and KuCoin. Binance had initially postponed the listing due to technical issues with their node but assured users that the issue was being fixed urgently and that deposits would be credited once the block height catches up.

Matter Labs, in a statement to CoinDesk, detailed the token distribution plans through the ZKsync Association. Despite some user dissatisfaction with the airdrop’s design, the team defended its “unconventional design.”

According to the distribution plan, 89% of the airdrop can be claimed by ZKsync users who transacted on the blockchain and met an unspecified activity threshold. The remaining tokens are allocated to ecosystem contributors, including:

• ZKsync native projects: 5.8%
• On-chain communities: 2.8%
• Builders: 2.4%

Additionally, Matter Labs employees will receive 16.1% of the ZK tokens, and investors will get 17.2%, both of which will be locked for a year and then released over three years. The rest of the token supply will be divided between ZKsync’s Token Assembly (29.3%) for governance purposes and Ecosystem Initiatives (19.9%).

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Bitcoin investment products saw significant outflows totaling $621 million last week amid mixed economic signals from the U.S., according to asset manager CoinShares.

Across the broader digital asset ecosystem, there were net outflows of $600 million, primarily driven by Bitcoin’s losses. This marked the largest outflow since March 22. Grayscale’s GBTC was particularly hard-hit, experiencing $273 million in outflows.

CoinShares noted that these outflows overshadowed minor inflows into various altcoins, including Ethereum (ETH), Lido (LDO), and Ripple (XRP).

The U.S. inflation data for May, as measured by the Consumer Price Index, exceeded expectations, remaining flat for the month. However, this positive news was dampened by the Federal Open Market Committee of the Federal Reserve maintaining its benchmark rate range at 5.25%-5.50%. The economic outlook suggested just one 25 basis point rate cut this year.

Bitcoin was affected by this hawkish stance, dropping to its lowest point in four weeks on Friday at $65,100. At the time of writing, Bitcoin was stable at $66,000. The CoinDesk 20 Index, which tracks the performance of the broader digital asset market, was down by 1.75%.

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The Australian Securities Exchange, which accounts for 90% of Australia’s equity market, has approved its first spot Bitcoin (BTC) exchange-traded fund. The issuer, VanEck, announced in a blog post that it will launch the ETF on June 20, touting it as the “lowest cost bitcoin ETF in Australia.”

VanEck resubmitted the application for this product in February. Reports from April indicated that DigitalX Ltd. had applied for approval around the same time, and Sydney-based BetaShares was also working toward launching a similar product on the ASX. Bloomberg had previously reported that spot Bitcoin ETFs might be approved by the end of 2024, making this an early development.

In contrast to the U.S., Australian firms need approval from both the Australian Securities & Investments Commission and the exchange listing the product. In May, ASIC confirmed via email to CoinDesk that DigitalX Ltd., VanEck, and BetaShares either had the relevant licenses or were collaborating with firms that did.

Earlier this month, Australia-based Monochrome Asset Management received approval for its Monochrome Bitcoin ETF (IBTC) from the Cboe Australia exchange, ASX’s smaller rival. Monochrome stated that its product was the first and only ETF in Australia to hold Bitcoin directly.

“Despite regulatory and exchange framework challenges in Australia, VanEck intends to lead the way in bringing the first Bitcoin ETF to ASX investors,” VanEck stated in their blog.

Industry experts previously expressed more excitement for a spot Bitcoin ETF to trade on ASX due to its larger trading volumes. ASX’s approval of VanEck’s product is expected to lend greater legitimacy to cryptocurrency and related ETFs in the region.

After the U.S. approved spot Bitcoin ETFs in January, there has been anticipation for similar approvals in APAC countries as they strive to position themselves as major crypto hubs. VanEck plans to leverage its global expertise and infrastructure, having launched approved spot Bitcoin ETFs in the U.S. and Europe, to provide Australian investors with a top-tier cryptocurrency solution.

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Tether, the company behind the $110 billion stablecoin, announced on Monday the launch of Alloy, a new token minting platform on the Ethereum network. Alloy allows users to create tokens collateralized by Tether’s tokenized gold (XAUT).

“Alloy by Tether is an open platform that allows the creation of collateralized synthetic digital assets and will soon be part of the new Tether digital assets tokenization platform, launching later this year,” said Paolo Ardoino, CEO of Tether, in an X post. Tether also mentioned in a press release that the platform might offer yield-bearing products in the future.

The first asset available on the Alloy platform is aUSDT, a token pegged to the U.S. dollar. Investors can mint aUSDT by using Tether’s XAUT as collateral. XAUT has a market capitalization of $570 million and is backed by physical gold stored in Switzerland.

The aUSDT token is designed for users who want to make crypto payments and remittances without selling their gold-backed tokens. According to the press release, the collateral must be overcollateralized, with new tokens limited to 75% of the collateral value.

The asset issuance for Alloy will be handled by Moon Gold NA, S.A. de C.V., and Moon Gold El Salvador, S.A. de C.V., both regulated under El Salvador’s National Commission of Digital Assets.

This new offering is part of Tether’s broader strategy to expand beyond USDT, the largest stablecoin by market value and a key component of the digital asset market. Tether has recently invested in bitcoin (BTC) mining, payment processing, and artificial intelligence through cloud computing. In April, Ardoino outlined plans to launch a tokenization platform that would enable the creation of digital versions of various assets, including bonds, stocks, funds, and loyalty reward points.

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Cryptocurrency markets remained under pressure during U.S. trading hours on Thursday, extending a decline that began the previous day when the Federal Reserve indicated it expected to cut rates only once this year.

Ether (ETH) saw a mid-morning bounce after U.S. Securities and Exchange Commission Chairman Gary Gensler, during a Senate hearing, stated he anticipated that spot ether ETFs would receive full approval from his agency by the end of the summer. This news briefly lifted ether by 1%, but the gain was short-lived. The price reversed more than 3% within an hour and was trading at $3,440 at press time, down 5% over the past 24 hours. The broader CoinDesk 20 Index was down 4.9% in the same period.

Bitcoin (BTC) also dropped nearly 5%, trading near a one-week low of $66,300.

Markets turned negative on Wednesday afternoon following the Federal Reserve’s hawkish policy meeting. The U.S. central bank kept its benchmark fed funds rate range steady at 5.25%-5.50% but updated its projections to suggest just one 25 basis point rate cut in 2024. In contrast, rate futures markets had been anticipating two to three 25 basis point cuts this year.

Thursday morning’s U.S. economic data, indicating continued softening in both inflation and the economy, failed to improve the macro mood in crypto. The May Producer Price Index (PPI) fell 0.2% against expectations for a 0.1% rise. On a year-over-year basis, PPI was up 2.2% compared to forecasts of 2.5%. Additionally, initial jobless claims rose to nearly a one-year high of 242,000, versus expectations of 225,000.

“$66K seems like equilibrium,” said well-followed analyst Skew in a post on X, who, along with others, is trying to decipher a market that hasn’t sustained higher levels despite recent bullish news. This includes improving inflation data, a Bitcoin-friendly presidential frontrunner in Donald Trump, spot ETH ETF approvals, and other risk asset markets, like U.S. stocks, reaching new all-time highs.

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Paradigm, known for its early investments in projects like crypto exchange Uniswap and Ethereum scaling solution Optimism, has raised $850 million for an early-stage crypto venture fund. Founded in 2018 by Coinbase co-founder Fred Ehrsam and former Sequoia Capital partner Matt Huang, Paradigm is one of the largest venture capital investors in the cryptocurrency industry. This new fund marks Paradigm’s first since Ehrsam stepped down from a leadership role in October.

“This is the sort of early-stage work that we love contributing to, and it’s what we’ll be increasingly focused on going forward,” Huang wrote in a blog post on Thursday.

In 2021, Paradigm raised a $2.5 billion fund, which was the largest-ever crypto investment vehicle at the time.

The pace of launching new cryptocurrency-focused funds has accelerated this year, with many existing funds also raising capital. This fundraising surge coincided with Bitcoin’s rally to record highs, driven by the introduction of exchange-traded funds (ETFs) investing directly in Bitcoin and recent indications that similar funds focused on Ether are likely to gain approval soon.

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