Hi investors, this week we're covering the latest in Bitcoin and Ethereum markets plus a post-mortem of the "Bitcoin" Twitter hack and the increasing necessity of decentralized identities.
Let's dive in!
Bitcoin.
Bitcoin is trading at $9135 USD (spot market) at the time of writing, we're down -1.04% since last week and still trading inside an accumulation range.
Source: TradingView
As has been the case since the beginning of the COVID crisis, BTC is showing increasingly high correlation to the S&P500.
Source: Coin Metrics
Source: Skew
As I observed in last week's issue, most of the trading volume has left quiet spot markets (real volume 24H) to seek leverage on derivatives exchanges:
Source: Messari
Source: Skew
Even BTC holders are entering the fray, moving their coins to Ethereum in the form of synthetics or wrapped BTC to benefit from higher yields on DeFi (mostly Compound).
Source: DeFi Pulse
Source: Compound
On the institutional side, Grayscale just released its Digital Asset
Investment Report for Q2.
The report shows a slight quarter-to-quarter slowdown in investment into Grayscale products and institutional actors still firmly driving demand.
Overall this is bullish news for BTC (and ETH) as it shows continuous accumulation YtD.
Source: Grayscale
The biggest story of the week for BTC however is the infamously named Twitter "Bitcoin Scam" which apparently was carried out by a lone hacker nicknamed "Kirk".
After gaining god-mode access to Twitter, Kirk proceeded to acquire and sell a number Twitter handles before he decided to scale up the scam by having verified Twitter accounts ask for Bitcoin.
Kirk acquired about $180k in BTC which he funneled to different trading venues and partly, to a Wasabi wallet with the intention to mix the coins and avoid chainalysis.
If you ask me, this doesn't feel like the work of a sophisticated agent. The way the stolen funds were moved haphazardly around the Bitcoin blockchain and the apparent absence of political motivation make me think it's probably some young computer genius hacking from their parents' basement rather than the work of a veteran scammer or a government.
I guess we should just all be happy that they didn't try to send threats of nuclear war to Russia or China from Donald Trump's Twitter account.
What this story really highlights is the dangers of centralized social media platforms and the need for decentralized identities owned by their holders. As Nic Carter pointed out in his last column for Coindesk, "we need a user-owned Internet more than ever".
The good news is that such projects are already in the work.
Microsoft's Bitcoin-based ION project recently launched its decentralized identifier solution on main-net and the Urbit community just deployed a complete overhaul of its upgrade and build system. Urbit communities are live and well, driven by the ethos of providing unique (and scarce) digital identities to the world and restore calm to computing.
Source: Urbit Blog
In a time of everything-is-Saas model, digital ownership is more important than ever. Changing the status-quo starts with digital identities and one being able to own the private keys to their social graph the same way they own the keys to their bitcoins.
In the virtual world of infinite bits, block-chain technology provides the literal keys to restoring scarcity and ownership.
That being said let's move on to Ethereum.
Ethereum.
ETH is changing hands at $233 USD (spot) at press time. We're down -2.41% since last week and trading on very light spot volumes.
Source: Trading View
As with BTC, most of the trading activity has moved over to venues that offer derivatives trading and to DeFi dApps where over 2.5 billion is now locked in USD-denominated value, including 3.5M of ETH.
Source: DeFi Pulse
The growth of DeFi isn't slowing down, bringing health to Ethereum's fee market...
Source: Coin Metrics
... bullishness to ETH against BTC:
...and bright hopes for the future of the network despite the recent delay in the launch of Phase 0 of Ethereum 2.0.
Predictions markets are now more evenly split on whether Ethereum will actually launch in 2020:
Source: prediction.exchange
For latest on Ethereum development I recommend this installment of the POV Crypto podcast with Preston Van Loon of Prysmatic Labs.
Source: POV Crypto
As I expressed in my last article, I remain a firm bull on ETH and the DeFi ecosystem in particular. I think that DeFi is finding product-market-fit and will trigger the next bull catalyst for crypto. Staking on Ethereum will just accelerate interest for the asset and tie individual ownership of ETH to the fate of the network.
What I am Reading:
There is no such thing as “a bitcoin” by Jerry Brito
The Value of Urbit Address Space (3 of 3) by Erik Newton & Galen Wolfe-Pauly
That's it for this week's analysis, see you next weekend for more market insights.
Until then,
🦊