Sept, 1, 2022

The latest moves in crypto markets, in context

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Good morning, and welcome to First Mover. I'm Lyllah Ledesma here to take you through the latest in crypto markets, news and insights.

In today's newsletter:

Price Point: Bitcoin has dropped below the critical level of $20,000 as MicroStrategy's Michael Saylor gets sued by the District of Columbia for tax fraud.
Market Moves: The potential Ethereum hard fork token ETHPOW could trade at 1.5% of ether's price, futures suggest.
Chart of the Day: Bitcoin exchange inflows rise.

Price Point

Bitcoin (BTC) dipped below $20,000 on Thursday as investors get a tough start to the month after a rocky August. The world's largest cryptocurrency by market value has lost 2% on the day, following a 14% decline last month.

Stocks and bonds also fell, along with European and Asian indexes. Oil prices dipped for a third day in a row.

Ether (ETH), the second largest cryptocurrency by market capitalization, lost 1.6% over the last 24 hours and was trading at $1,560 at the time of writing. Litecoin (LTC), EOS and unus sed leo (LEO) posed small gains.

Bank of America said Wednesday in a research podcast that the chance of a more hawkish Federal Reserve and the likelihood of interest rates staying higher for longer has not been fully priced into risk assets, including cryptocurrencies.

In the news, the District of Columbia is suing MicroStrategy founder Michael Saylor for tax fraud. The attorney general's office is also suing the business software company for allegedly helping him evade taxes on his earnings in the district.MicroStrategy shares were down more than 4% following the news.

Crypto lender Celsius is facing another group of customers who want their money back, Nikhilesh De reports.

Developers behind the Helium network have proposed shifting the entirety of the protocol to Solana, citing faster transaction speeds, high uptimes and more interoperability with other blockchains.

And finally, in Latin America, CoinDesk's Marina Lammertyn unpacks how the political turmoil in Peru has led citizens to turn to crypto as a safe haven.

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Market Moves

By Omkar Godbole

Potential Ethereum Hard Fork Token ETHPOW Could Trade at 1.5% of Ether Price, Futures Suggest

If you have been following the crypto market for some time, you probably have heard that Ethereum, the world's largest smart-contract blockchain, could undergo a hard fork later this month, splitting into a proof-of-stake (PoS) chain and a proof-of-work (PoW) chain.

The Ethereum chain with the PoS consensus mechanism will retain the seven-year-old ether (ETH), currently trading at $1,570, as its native token. The PoW chain, representing a group of miners opposing the impending Merge, or switch to PoS, would have a new token called ETHPOW.

We know that if the chain splits, ETH holders will receive ETHPOW free of cost, much as corporate shareholders receive additional units on a stock split. What's not known is the value of the ETHPOW token.

One way to gauge the potential value is to look at the difference between spot ether and futures prices, according to Paradigm, which focuses on over-the-counter trading for institutions.

As of Wednesday, ether Sept. 30 expiry contracts listed on major exchanges traded at a discount of $18 to the spot price, indicating the market is expecting the ETHPOW token to draw a price of at least $18 at inception.

"We can infer how much the market estimates ETHPOW will be worth from simply looking at spot-future basis, since spot = PoS + PoW, while future is just PoS," Paradigm said in a Merge-focused blog post published Wednesday. "Currently, the basis is implying ETHPOW to be priced ~$18, which is ~1.5% of ETH market cap."

Trading giant Cumberland voiced a similar opinion last month, saying, "we can infer how much the market estimates ETHPOW will be worth from the spot-future basis."

The logic behind considering the negative $18 basis as a possible ETHPOW price is that the discount represents the risk-free cost of collecting the potential forked tokens. So, if traders are willing to pay $18, they must expect the token to be priced at $18 or higher.

Read the full story here.

Chart of The Day

Bitcoin Exchange Inflows Rise

By Omkar Godbole

Centralized exchanges received more than 13,000 BTC on Wednesday, the highest daily net inflow since July 17.
Investors usually deposit coins on exchanges when intending to liquidate their holdings.
Large inflows, therefore, are taken to represent an increase in coins available for selling.

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Register with code Coindesk to receive $100 off your ticket!

Crypto Prices

The following are the biggest movers in the CoinDesk 20 digital assets over the past 24 hours:

Biggest Gainers

Asset	Ticker	Returns	DACS Sector
Terra	LUNA	+22.9%	Smart Contract Platform
Cosmos	ATOM	+0.4%	Smart Contract Platform
Polygon	MATIC	+0.4%	Smart Contract Platform

Biggest Losers

Asset	Ticker	Returns	DACS Sector
Solana	SOL	−2.9%	Smart Contract Platform
Loopring	LRC	−2.9%	Smart Contract Platform
Avalanche	AVAX	−2.4%	Smart Contract Platform

Sector classifications are provided via the Digital Asset Classification Standard (DACS), developed by CoinDesk Indices to provide a reliable, comprehensive, and standardized classification system for digital assets. The CoinDesk 20 is a ranking of the largest digital assets by volume on trusted exchanges.

Latest Headlines

BofA: Crypto Buying Momentum Fades as Investors Weigh Bear-Market Bounce, Recession Risk
The chance of a more hawkish Federal Reserve and the likelihood of interest rates staying higher for longer has not been fully priced into risk assets, including cryptocurrencies, the bank said.
Crypto.com Pulls Plug on $495M Champions League Sponsorship Deal: Report
Regulatory concerns in Europe prompted Crypto.com to pull out.
Indonesia to Establish 'Crypto Stock' Exchange by 2022-End: Report
The Indonesian government sees the exchange as a means of protecting consumers as interest in digital currencies has risen, deputy trade minister Jerry Sambuaga said on Wednesday.
Bitcoin Mining Middleman Compass' Georgia Facilities to Close as Energy Prices Soar
The company is offering to move approximately 5,000 machines to Texas.
Digital Dollar Project Plans to Explore CBDC Technical Solutions With New Sandbox
The non-profit organization advocating for a U.S. central bank digital currency plans to work with crypto platforms like Digital Asset and Ripple to explore technical and policy aspects of a digital dollar.
Crypto Asset Manager Babylon Finance Will Shut Down After Failing to Recover From Rari Hack
Babylon's founder said several liquidity pools and BABL tokens price were severely impacted, which contributed to the decision.
Crypto Lender Celsius Faces Another Group of Customers Who Want Their Money Back
More than 60 of Celsius' custodial-account holders petitioned a bankruptcy court to force the crypto lender to send them their funds back outside of the proceedings.
Helium Developers Propose Shifting Network to Solana Blockchain For Faster Speeds
Developers cited faster transactions and "higher uptimes" among several reasons behind the proposed move.
California Assembly Passes 'BitLicense' Bill
The Digital Financial Assets Law, which is similar to New York's BitLicense, has been criticized by industry stakeholders.

What to Watch

Check out the CoinDesk TV show "First Mover," hosted by Christine Lee, Emily Parker and Lawrence Lewitinn at 9:00 a.m. U.S. Eastern time.

Greg Johnson, co-founder and CEO, Rubicon Crypto
Michael Bacina, partner, Piper Alderman
Andrew Rossow, Web3 and internet attorney

Which institutes are most impacting the blockchain world? Tell us your thoughts in a five-minute survey. We're welcoming responses until Sept. 7. Take the survey here.

Disclaimer: The information presented in this message is intended as a news item that provides a brief summary of various events and developments that affect, or that might in the future affect, the value of one or more of the cryptocurrencies described above. The information contained in this message, and any information liked through the items contained herein, is not intended to provide sufficient information to form the basis for an investment decision. The information presented herein is accurate only as of its date, and it was not prepared by a research analyst or other investment professional. You should seek additional information regarding the merits and risks of investing in any cryptocurrency before deciding to purchase or sell any such instruments.