Top Stories of Last Week

Regulatory

  • People’s Bank of China told country’s major financial institutions to stop facilitating virtual-currency transactions, saying banks must not provide products or services such as trading, clearing and settlement for crypto transactions. They also have to make sure to identify virtual-currency exchanges’ and over-the-counter dealers’ capital accounts, and cut off payment link for transaction funds in timely manner. Latest statement comes after consultation with Industrial and Commercial Bank of China, Agricultural Bank of China, Construction Bank, Postal Savings Bank, Industrial Bank and Alipay Network Technology on issue.
  • SEC delayed decision on Valkyrie Digital Assets ETF, extending 45-day window to make decision which was due to expire June 26. SEC designated Aug. 10 as revised date for decision on Valkyrie Bitcoin Fund.
  • El Salvador’s Bitcoin law set to come into effect on Sept. 7. Government will use Chivo e-wallet, preloaded with $30 of Bitcoin that will be sent to user’s wallet once they verify identity via app’s face recognition software.
  • Palestinian Monetary Authority looking into development of digital currency, according to Feras Milhem, governor of Palestinian Monetary Authority. 

Project Development

  • Banque de France extended testing of CBDC for wholesale market involving CBDC used to simulate settlement of securities using TARGET2-Securities, the European Central Bank engine for instantaneous settlement. Experiment was conducted in collaboration with SEBA and Banque Internationale à Luxembourg.
  • Circle partnered with offline maps application Maps.me to integrate in-app support for USDC. Maps.me mobile app provides offline maps using OpenStreetMap data, and new partnership will integrate support for USDC into Maps.me. 

Institutional

  • MicroStrategy said it bought about 13,005 Bitcoins for $489 million in cash at average price of roughly $37,617. Company now holds some 105,085 Bitcoins, acquired for total of $2.74 billion at average purchase price of $26,080.
  • Robinhood Markets LLC’s planned IPO reportedly facing delays in bid to go public because of growing cryptocurrency business. Goal now is to list next month ahead of July 4 holiday season.
  • Citigroup’s wealth management division formed Digital Assets Group, according to internal memo saying unit will be helmed by Alex Kriete and Greg Girasole of Citi Global Wealth Investments arm.
  • VanEck filed draft prospectus for Bitcoin futures mutual fund with SEC. Bitcoin Strategy Fund will invest in Bitcoin futures contracts as well as pooled investment vehicles and exchange-traded products with exposure to Bitcoin. However, fund will not invest in Bitcoin or other digital assets directly.
  • PayPal and Visa partnering in Blockchain Capital’s fifth venture fund of $300 million. Fund also received backing from pension funds and university endowments but declined to name additional LPs.
  • BBVA Switzerland started offering bitcoin trading and custody services, saying services will be available to all private banking clients.
  • Goldman Sachs conducted first repo trade using JPMorgan’s private blockchain network in form of tokenized version of U.S. Treasury bond swapped for JPMCoin.

Exchanges

  • Central Bank of Portugal licensed two cryptocurrency exchanges, recognizing Criptoloja and Mind The Coin as VASPS. First time exchanges have been licensed since new law on crypto trading platforms took effect this year. 
  • Crypto exchange Bullish in talks to go public via SPAC merger with Far Peak Acquisition Corp, according to report from Bloomberg. Bullish backed by Peter Thiel, Galaxy Digital and Nomura Holdings. Bloomberg reports deal could value Bullish at up to $12 billion.
  • FTX announced partnership with Major League Baseball as “Official Cryptocurrency Exchange brand of MLB.” FTX branding will appear on all umpire uniforms starting at All-Star Game on July 13 and continue into postseason.
  • Coinbase subsidiary registered with Japan’s Financial Services Agency to begin offering BTC, ETH, XLM, LTC, and BCH, with more currencies expected to be added once Coinbase’s registration has been finalized.
  • Binance’s NFT marketplace set to launch with auction featuring works by Andy Warhol and Salvador Dali. “Genesis” auction will be marketplace’s first premium event and will feature Warhol’s “Three Self Portraits” and digitized NFT of Dali’s “Divine Comedy: rebeget.”

Fundraising

  • Andreessen Horowitz raised $2.2 billion for Crypto Fund III. Fund was initially rumored at $1 billion, with later reports putting it at $2 billion.
  • Chainalysis added another $100 million in Series E round of funding led by Coatue Management, bringing valuation to $4.2 billion.
  • CipherTrace, a security firm that tracks crypto crimes, closed $27.1 million Series B round of funding led by Third Point Ventures. Round was also backed by Neotribe, Acrew Capital and Seraph Group.
  • Crypto financial services firm Amber Group raised $100 million in Series B round led by China Renaissance at pre-money valuation of $1 billion. Other participants include Tiger Brokers, Tiger Global Management, Arena Holdings, Tru Arrow Partners, Sky9 Capital, DCM Ventures and Gobi Partners. Existing investors Pantera Capital, Coinbase Ventures and Blockchain.com also joined.
  • Digital-asset lender Tesseract raised $25 million in Series A funding led by Augmentum Fintech. Other participants included Coinbase Ventures, BlackFin Capital Partners and Jabre Capital Partners Family Office.
  • Securitize, Inc. announced Series B round of $48 million raised from Blockchain Capital and investment funds managed by Morgan Stanley Tactical Value.
  • Kaiko, a cryptocurrency market data and research provider, closed $24 million Series A funding round led by Anthemis and Underscore VC. Other investors include Point Nine and Alven.
  • NFT marketplace Rarible raised $14.2 million Series A round of funding to hire new employees and launch additional marketplace on Flow blockchain.

Things to Watch This Week

  • Bitcoin Difficulty Adjustment
    • Bitcoin’s mining difficulty is poised to see its largest drop ever in the upcoming adjustment set for the end of the week. Estimates show a drop of over 23% is set to happen in roughly five days, as of writing. It would mark the largest difficulty drop ever in Bitcoin’s history and will also represent three consecutive negative difficulty drop, which hasn’t happened since Dec 2018. The mining farm shutdown orders issued by the Chinese government has not only reduced hash rate significantly, but has also resulted in the average block production interval increasing to roughly 12.9 minutes versus the intended 10 minute block interval. It’s estimated that the overall shutdown of miners in China is nearly 70-90% complete, and thus the effect of miners turning off machines and beginning their relocation process potentially has already passed. However, an adjustment this large should be monitored closely as it approaches, as the current network’s state could be disturbed by any additional news or event that causes further uncertainty. 
  • Legal Tender
    • It will also be important to keep an eye on the updates regarding Bitcoin’s legal tender status. Not only will El Salvador be preparing to give away as much as $135 million worth of Bitcoin to its citizens, but reports of a bid in Paraguay implementing legislation to follow El Salvador’s lead were also established. Last week, President Nayib Bukele announced that citizens would receive $30 worth of Bitcoin after setting up an account on the government’s cryptocurrency app. With the country set to officially adopt Bitcoin as legal tender on September 7th, an estimated 4.5 million citizens will be eligible. Should all Salvadorians opt to receive Bitcoin, it would grow the Bitcoin user network an estimated 2.5%. As for Paraguay, the draft legislation seeking to establish Bitcoin as legal tender will be published on July 14. The beginning of July could see additional news on this front emerge from other countries that have indicated a desire to follow El Salvador’s route, which would undoubtedly help to inject some positive sentiment into markets.
    • Michael Saylor@michael_saylor
      MicroStrategy has purchased an additional 13,005 bitcoins for ~$489 million in cash at an average price of ~$37,617 per bitcoin. As of 6/21/21 we #hodl ~105,085 bitcoins acquired for ~$2.741 billion at an average price of ~$26,080 per bitcoin.

      Kevin Zhang@SinoCrypto
      Updates from calls with #bitcoin mining colleagues in China and what we’re seeing at @FoundryServices

      1) Sentiment is obviously quite dreary and the reality is setting in that it’s GG for mining in China. Some mining friends have stuck around Sichuan since the Bitmain conference to drink their sorrows away. Now… 酒都不想喝了 – “not even in the mood to drink anymore”

      2) They estimate that roughly 70% of the #bitcoin mining capacity in China has gone offline and by the end of this month, it’ll be closer to 90% offline.

      3) In the most extreme cases, some colleagues in Kangding, Sichuan have been instructed by the power plants/stations they have installed their mining facility on to remove ALL infrastructure (low-medium voltage, racks/shelving, containers, etc…) with 1-2 weeks notice

      4) Having to remove all of their infrastructure equipment is just an extra kick in the nuts, especially considering most of the operations (especially the larger ones) received the proper assurances and permitting to run their operations
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      Bobby Lee – Ballet: World’s EASIEST wallet!  @bobbyclee
      #China has just banned #Bitcoin AGAIN! Banning exchanges, ICOs, mining, and now forbidding crypto-related bank transfers. Scared? You have hung on for so long… Don’t panic — Don’t capitulate. Remember, the coldest and darkest hour is always right before the dawn.

      In 2017, China cracked down on crypto in Aug, resulting in closure of all exchanges in time for Oct 1 National Day celebration. (Crypto rebounded in Nov.) In 2021, China cracks down again on mining & bank transfers, ahead of Communist Party 100th founding anniversary on July 1.

      This will be the bottom for the correction in 2021. Just like in mid-Sep 2017, no one could have optimistically foreseen a comeback bull market rally later that year, it’s also very hard now for people to see that the real 2021 bull market is right around the corner. Believe me?

      When the 2021 bull market does come later this year to set a new ATH, people will quickly forget the fear & panicky days of the past few weeks. In the last cycle, we also had some really dark days in the Spring and Summer of 2017. Only HODLers remember how lonely it felt. Right?

      moneyordebt ∞/21M@moneyordebt
      The Great Mining Shutdown: At midnight on June 19, China forced shutdown of a number of mining farms. As mining hashrate was extinguished rapidly, the #Bitcoin blockchain hiccupped, with the block time increasing to 70 minutes for the block that spanned midnight. 1/

      But #Bitcoin quickly reverted to form with block times back around 10 minutes soon after. The decrease in hashrate started a few weeks prior as authorities in the top four crypto mining provinces of Sichuan, Qinghai, Xinjiang, and Inner Mongolia announced restrictions. 2/

      #Bitcoin’s difficulty changes every two weeks, and is a measure of average global hashrate during the prior interval. It is just a number, in the trillions, fed into the cryptographic puzzle, and adjusts up or down with hashrate in order to keep block times close to 10 minutes.

      #Bitcoin difficulty was 25 trillion in mid-May and had dropped to 20 by mid-June. As of 20 June it is projected to drop another 10% at the next adjustment near the end of the month. 4/

      The #Bitcoin hashrate at the mid-May peak was about 180 Exahashes/sec and is about 125 Exahashes/sec post shutdown. Ten hours after the Great Mining Shutdown the hashrate distribution of the top miners looked like this (explorer.BTC.com). 5/

      Four #Bitcoin pools had drops of 25% or more in their hashrate: Antpool, Binance Pool, Huobi Pool, and BTCtop. Most of the rest had single digit percentage drops, and the pool FoundryUSA increased hashrate slightly. 6/

      What happens is #BTC miners who drop less than average will reap greater block rewards & transaction fees going forward. It should be remembered that a pool consists of one or several mining farms owned by the operator together with hashrate contributed by many small miners 7/

      The #Bitcoin mining pool shares rewards in proportion to contributed hashrate. To the extent these small miners are outside of China or too small to be noticed, they will likely continue to generate hashrate. 8/

      The net effect of all of this is it is good for #Bitcoin and good for the growing Bitcoin mining industries in North America and Central Asia. There were concerns that the top four mining pools had over 51% of the hashrate 9/

      #Bitcoin hashrate now becomes more decentralized requiring six pools at present to account for just over half of the total hashrate. This is one more disruptive event that illustrates the anti-fragile nature of Bitcoin. /fini

      John Street Capital@JohnStCapital
      0/ Has been a tough ~2.5 months for $BTC & $ETH$BTC trailing 1-60D performance is mostly in the bottom 10% all-time. Down 38.8% over the last 60D is the worst performance (clustered the past 2 weeks) since last March & prior to that Dec ’18 / Jan ’19 when it broke the $6K level

      1/ While $ETH typically trades w/ a higher beta to $BTC it also tends to lag it by a bit as there is often rotation from $BTC to $ETH & then alts more broadly. While the trailing 1-20D performance is bottom ~10% the trailing 30-60D performance in the bottom ~20%.

      2/ The theoretical cost basis of $BTC is now $19,696 vs. a “close” of $31,677 or a ~60.8% difference the lowest levels since July / June of last year.
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      Mo@MorganTBennett
      Black Swan Alert The amount of $USDC in multi-collateral $DAI now exceeds the market cap of @MakerDAO. That means that if USDC fails, even maximal $MKR dilution cannot save the day. DAI will collapse as well. Can anyone explain what is the purpose of DAI at this point? 1/

      Is it possible that adding >50% USDC to MCD merely reduced low-amplitude deviations from the peg, but actually INCREASED the risk of total failure? 2/

      And why was single-collateral DAI shut down in April 2020? It worked pretty well until that point. Could it not run in parallel so that users could chose which risk profile they prefer? (cc @RuneKek) 3/

      I was enthusiastic about MakerDao from day one. Perhaps there are reasonable explanations for the governance decisions. In the meanwhile, I’m closely watching alternatives like @reflexerfinance $RAI or @synthetix_io $sUSD. 4/

      Larry Cermak@lawmaster
      Most mining pools with a lot of miners in China are now reporting hashrate that’s more than 50% lower than it was on May 15th. Not all miners in China are offline yet (estimates are about 70% so far and ~90% by EOM).

      Total hashrate appears to be down just about 50% at the moment.

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      Sam Trabucco@AlamedaTrabucco
      Word on the street is: this price graph is fucked up. What happened? A thread about the calm, the storm, and how to tell the difference.

      There have been a few prevailing narratives lately: – China FUD driving prices down, U.S. maybe to follow? – Bitcoin is bad for the environment, or at least Elon thinks so – Maybe with this dip, some of the institutions who bought are under water and need to sell? (Saylor, etc.)

      None of that is concrete, though, and people vacillate between over-stating the pieces of news they want to hear and under-stating the ones they don’t. So let’s break it down a little, and look at some stuff which *is* concrete.
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      CryptoQuant.com@cryptoquant_com
      Over 100k ETH staked in ETH 2.0 yesterday
      Cassandra@michaeljburry
      Trapped bulls often fall for the latest support.

      Alex Krüger @krugermacro
      The $BTC scenario Burry presents can happen. That’s one of the reasons holders & funds have been selling so much and stablecoin balances on the sidelines are so large. Look at the market, it is rather dead. Yesterday ended up as a simple short squeeze.

      However for $BTC to break down hard it would likely need to first get bulled up, let longs lever up. Have a look at two historic breakdowns of support: September 2019 & November 2018. In both cases funding prior to the break was very positive. It is now consistently negative.

      Zooming in. This is now. I’m using perpetuals – spot basis as proxy for funding (these are extremely similar). Funding has been consistently negative since May 19. Initial support (30k-29k) comes from February and has been under pressure for one month. Bulls are scared & hedged

      This is 2019. The breakdown was preceded by an extended period of very high funding and a bull trap created by a 9% upwards swing. The initial support (9100-9000) came from June and had been retested multiple times in the two months prior to the crash. Bulls were 100% offside.
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      Evan Van Ness @evan_van_ness
      EIP1559 is happening in a matter of weeks. Beyond just $ETH number go up, here is a thread about all the important non-pecuniary 1559 benefits for #Ethereum 1/x

      BENEFIT NUMBER 1: UX. EIP1559 was written by Vitalik 3 years ago and then @econoar picked it up and pushed it hard because Eric was frustrated with how he couldn’t get friends to use Eth apps. The gas fee and gas limit are too complicated for new users. 2/

      EIP1559 mostly abstracts gas fees away from the user. Much of the complexity will be pushed to wallets away from users. All users have to do is pay the basefee. This should also help app devs not deal with so many frustrated users when their transactions get stuck 3/

      Some wallets will deal with this better than others. Just like many wallets today suck and leave users blaming Ethereum (when it’s the wallet’s fault), there will still be some of that even with 1559. Hopefully on balance this should be far reduced 4/

      BENEFIT NUMBER 2: Predictable transactions fees & new BASEFEE opcode will help rollups. This is a corollary of #1, but is so important that it deserves to be #2. Predictable transaction fees help rollups posting calldata 5/

      to quote EIP3198: “Having the BASEFEE opcode allows you to lengthen the challenge period automatically if you see that basefee is high” A benefit for all of l2 that uses cryptoeconomics (optimistic rollups, state channels, Plasma) Ethereum is all-in on rollups, this is big. 6/
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      Mike Novogratz@novogratz

      Starting to think that major DEFI protocols are going to have to decide if they are going to play by the rules that most countries want them to (KYC/AML), or if they are going to flip the middle finger at them. Invest in a compliance layer now or pay the piper later.

      2) i know i will take hell for this tweet. that said, my networks are good and i am hearing a growing chorus that officials are focused on this with increased intensity…and its not wise to think governments have no tools in their kit to go after the bad guys,,, they do.

      if we want this ecosystem to grow we need to recognize we need to operate within the rules society sets. I am not talking about doing this with no privacy. zero knowledge compliance and other systems need to be developed for defi to scale. i am confident they will be.

      Caitlin Long @CaitlinLong_
      1/ IT MAY SURPRISE YOU that, as a #bitcoiner, I think @BIS_org‘s proposed 1:1 capital rqmnt for #bitcoin is TOO LOW & view banks entering bitcoin trading as bad for banks & bitcoin’s price volatility. The problem isn’t Bitcoin–it’s the banks
      forbes.com/sites/caitlinl…
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