In this week’s crypto highlights, we explore the price movements of BTC, COMP, MKR, and CRV. Additionally, this recap includes other notable industry news items that occurred over the last seven days. Without further ado, let’s dive into the latest market developments.
Noteworthy market events
The SEC reportedly said that spot Bitcoin ETF filings are “inadequate”
On June 30, the Wallet Street Journal reported that the U.S. Securities and Exchange Commission (SEC) considers unclear the recent applications for spot Bitcoin ETFs filed by BlackRock, Fidelity, and other asset managers. The regulator stated that they didn’t contain sufficient information regarding the so-called surveillance-sharing agreements, to protect users from market manipulations.
This sparked speculation that the SEC is unlikely to approve said ETFs. However, some experts claimed that the regulator just pointed out the lack of a small technical detail in ETF submissions about relevant partners.
Following this, Fidelity, Invesco, VanEck, 21Shares, and WisdomTree refiled their applications, indicating that Coinbase will provide market surveillance in support of their funds. This fact wasn’t included in previous iterations.
In an updated form filed for BlackRock’s spot Bitcoin ETF, Nasdaq also included Coinbase as a market surveillance partner. The filing revealed that on June 8, Nasdaq and Coinbase had entered into an agreement aimed at improving the exchange’s market surveillance program, and granting access to data on spot Bitcoin trades.
TrueUSD faced a crisis of confidence after its reserves were attested by former FTX auditor
The TrueUSD (TUSD) continued to be under pressure, experiencing frequent depegs. Last week, TrueUSD lost its peg to the U.S. dollar amid the news that Prime Trust suspended fiat and digital asset transactions, following the Nevada’s regulator’s order. In addition, Nevada’s financial regulator filed to place crypto custodian Prime Trust into receivership, stating that the company is unable to honor customers’ withdrawals due to a shortfall.
Another depeg happened after Coindesk reported that the attestation of TrueUSD’s proof of reserves was performed by the Network Firm. This firm was established by former employees of Armanino, which was an FTX auditor. While Armanino ceased conducting crypto audits last year, some of its members departed and established a new startup called The Network Firm, dedicated to providing such services.
FTX faced substantial criticism due to its deficient internal controls. Armanino’s audit for 2021 did not express an opinion on the adequacy of internal controls over accounting and financial reporting at FTX.US, or FTX Trading.
In 2019, the Public Company Accounting Oversight Board found Armanino’s quality-control procedures to be lacking. The company faced scrutiny for its audit of Lottery.com, where a $30 million overstatement of cash balance and erroneous revenue recognition were identified.
Poly Network was hacked, and an attacker issued billion of tokens on multiple chains
On June 2, an unknown hacker exploited the Poly Network cross-chain protocol, allowing them to reportedly create “$34 billion worth of tokens” out of thin air. The same day, Poly Network confirmed the hack, adding it will be temporarily suspending its services.
The team revealed that the exploit affected 57 crypto assets on 10 blockchains, including Ethereum, BNB Chain, Polygon, Avalanche, Heco, OKX, and Metis. The majority of the issued assets appear to be on Metis.
According to DeFi security specialist Arthad, the exploit resulted from a smart contract vulnerability. The hacker took advantage of this flaw by creating a fraudulent parameter, containing a counterfeit validator signature and block header. The smart contract accepted this malicious input, allowing the hacker to bypass the verification process. As a result, the hacker gained the ability to issue tokens from Poly Network’s pools, and transfer them to their own addresses across different chains.
At one point, the hacker’s wallets held around $42 billion worth of tokens. However, due to limited liquidity, they were unable to convert all of these assets and only managed to sell a fraction of them. Currently, the estimated hacker’s gains from the exploit range between $5-10 million. It is worth noting that this is not the first time that Poly Network has experienced a security breach.
U.S. court ordered Kraken to turn over customer details to the IRS
The U.S. District Court for the Northern District of California ordered the Kraken crypto exchange to provide the Internal Revenue Service (IRS) with customer information. The platform will have to disclose the names, dates of birth, actual addresses, phone numbers, and Tax IDs of users who have transacted more than $20,000 in a calendar year. The IRS stated that it needed that information to see if any of the exchange’s users had underreported their taxes.
The IRS filed a court petition for this information in February. As a response to this request, Kraken filed a lawsuit against the IRS, calling the agency’s demands an unjustified treasure hunt.
One sentence news
- The Bittrex crypto exchange filed a motion to dismiss a lawsuit against it by the SEC, claiming that the regulator lacks the authority to apply securities laws to crypto.
- The Luminex team introduced the BRC-69 standard, which simplifies and reduces the cost of issuing recursive NFT collections on the Bitcoin blockchain, by more than 90%.
- Polygon Labs revealed the proposed architecture for Polygon 2.0, consisting of four levels, each responsible for its own part of processes within the network.
- CME Group announced plans to launch ETH to BTC ratio futures.
Bitcoin is crabbing
After reaching the 2023 high, the Bitcoin price switched to “come on, do something” mode, predominantly moving sideways. Despite this, the largest cryptocurrency ended the first half of 2023 as one of the best-performing assets, showing an 87% price increase over the period.
For comparison, in the same time frame, the S&P 500 and Nasdaq Composite experienced 15.9% and 31.7% gains, respectively. It was the largest gain for the latter in 40 years, but it still wasn’t enough to outperform Bitcoin. Amid such a price surge, Bitcoin’s correlation with traditional assets, including bonds and commodities, continued to decline. Analytics firm Block Scholes even reported that Bitcoin no longer correlated with U.S. stocks.
Following this performance, Glassnode reported an all-time high in Bitcoin miner revenue sent to exchanges. When miners send BTC profits to exchanges, they typically do so in preparation to cash out, which could increase selling pressure on the market.
However, miner balances maintained a slow overall uptrend, meaning there is little evidence to suggest that BTC miners are experiencing difficulties. Furthermore, illiquid supply remains “elevated,” supporting the general accumulation behavior.
In total, existing market sentiment reflects investors’ indecisiveness. While some are bullish, anticipating the formation of bullish flags and resistances near $35,000, others contemplate that a pullback to $28,000 could follow.
Daily timeframe suggests that a price correction is possible. MACD is on the verge of a downward crossover, while RSI formed a slight bearish divergence. The asset approached the middle of the Bollinger channel, hinting that sideways movement may soon come to its end. The following movement could depend on whether or not bulls defend the 20-day EMA.
The current price movement resembles the last week of March 2023, when the price also consolidated in an upward sloping channel. Back then, this led to a small jump before deeper correction. Lower timeframes indicate that there is still room for an upward movement as Bitcoin broke RSI’s descending trend and moved to positive territory.
COMP price tripled in a month
While Bitcoin is moving sideways, some altcoins are engaging in kangaroo cosplay. From June 25 to July 2, the COMP price more than doubled, moving from $30 to $70. In general, over the last 30 days, the asset surged by almost 200%. One of the potential catalysts could be increased whale buying on spot markets.
In addition, Compound’s founder recently submitted filings to U.S. securities regulators for “Superstate,” a company that will create a fund aimed to invest in short-term U.S. Treasuries, utilizing Ethereum for record-keeping.
As a result, the COMP price moved to the overbought zone on a daily timeframe. The correction has already begun, and the first major support level is considered to be $59.20, which corresponds to the 0.236 Fibonacci point. A bearish divergence on lower timeframes indicates the path of least resistance is downward.
If the price breaks $59.20, the following target could be $52.60 and $46.99. If sustained above it, the asset may retest the $70.76 level.
MKR took advantage of diversification from USDC
Another top rollercoaster in the crypto amusement park was Maker (MKR), whose price surged by more than 50% in a week, and reached $1,000. Over the last few weeks, MakerDAO drastically reduced the share of the USDC stablecoin in its DAI collateral, from 4.4 billion USDC to 521 million. Earlier, there was concern that DAI significantly relied on USDC, as it was responsible for almost 45% of stablecoin’s collateral.
In response to this development, MKR whales have been acquiring more tokens. According to Santiment, between June 21 and July 5, large MKR holders (10,000-100,000 coins) increased their holdings by an additional 23,000 MKR. This accumulation could be one of the catalysts behind the recent rally. In addition, MakerDAO increased the DAI Savings Rate (DSR), providing users additional incentives to hold and lend DAI.
However, such performance drove the MKR price to the overbought zone. The asset is trying to sustain above the psychological level of $1,000, but daily and lower timeframes indicate that a price correction could follow. The $924 level could act as the closest major support level.
Curve’s architecture is used in CBDC
Project Mariana, a cross-border central bank digital currency (CBDC) initiative, has been undergoing testing by the Bank for International Settlements (BIS). In the design of the program’s AMM (Automated Market Maker) exchange, the BIS utilized Curve Finance’s AMM architecture. This AMM exchange has now been deployed on Ethereum’s Sepolia testnet.
Furthermore, Curve Finance added WBTC and ETH as collateral selection for loans against their native stablecoin, crvUSD, helping its supply to cross the 50 million mark. This news was positive for the CRV price, which experienced more than a 15% increase in a week.
The daily RSI broke the descending trend (white line) and moved to the positive territory, indicating the price may break its descending resistance line (cyan line) as well. MACD crossed the zero line, which may support the bullish momentum. If the asset fails to sustain $0.80, the asset may retest the 20-day EMA. If successful, it could lead to a breakout of the descending resistance.
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Disclaimer: For information purposes only. Not investment or financial advice. Seek professional advice. Digital assets involve risk. Do your own research.