The latest price moves in crypto markets in context for April 14, 2023.
This article originally appeared in First Mover, CoinDesk’s daily newsletter putting the latest moves in crypto markets in context. Subscribe to get it in your inbox every day.
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Ether (ETH) continues to outperform bitcoin (BTC) following the Ethereum network’s Shanghai upgrade, which has proven to be bullish for much of the cryptocurrency market, with many altcoins following suit. Ether is up 6% on the day vs. bitcoin which gained 1%. Bitcoin did briefly cross $31,000 on Friday for the first time since June 2022, marking a 10% gain over the last 7 days. Ether rose 13% over the same time frame. Arbitrum (ARB) an Ethereum scaling solution, led gains this week, rising almost 30%. According to Sheraz Ahmed, STORM’s managing partner, ARB is bouncing back from the overselling caused by its airdrop in March, which saw the Ethereum layer 2 distribute its long-awaited governance token to community members. The airdrop, however, was plagued with bugs and phishing scams. “The crypto markets are heavily emotionally driven, and we often see overbought/sold tokens based on over-reactions,” said Ahmed.
The tokenization of real-world assets gathers pace, Bank of America (BAC) said in a research report Thursday, which noted that the tokenized gold market surpassed $1 billion in value last month. Tokenization is the process of putting ownership of tangible assets – precious metals being one example – on the blockchain, and thus offering the convenience of buying and selling these assets around the clock as the involvement of traditional brokers is not necessary. Bank of America sees this tokenization – which could also include commodities, currencies and equities –as a “key driver of digital asset adoption.”
Solana Labs’ crypto-forward smartphone Saga will go on public sale May 8, the company behind the Solana blockchain said Thursday. Pre-ordered devices are shipping now. The Android smartphone is a gamble on mobile being imperative to the future of crypto, employees at Solana-focused companies told CoinDesk. It was nearly 10 months ago that Solana first teased the radical potential of a cellphone that doubled as a dedicated crypto hardware wallet, and the possibilities such a product could hold for its entire ecosystem. The new device from Solana Mobile costs $1,000 and is built on hardware from Bay Area smartphone company OSOM. Phonemaker names both big and small – HTC and Sirin Labs among them – have previously failed in their efforts to create a crypto-forward smartphone, setting an ominous precedent for Solana, a device built for and marketed to a single crypto ecosystem.
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The size and price range for the offering has yet to be determined
Blockchain and smart-contract platform Chia Network – founded by Bram Cohen, inventor of BitTorrent – has submitted a confidential draft registration to the U.S. Securities and Exchange Commission for a proposed initial public offering (IPO).
The size and price range for the offering has yet to be determined, Chia said in a press release on Friday.
Chia’s aspirations for a public listing go back to bull run of 2021, when Bloomberg reported the blockchain raised $61 million in a Series D funding round, led by Andreessen Horowitz (a16z) and Richmond Global Ventures, at $500 million valuation. At the time, then chief operating officer (now CEO) Gene Hoffman was reported to have said that it was on “an accelerated timeline” to an IPO.
Native token XCH has shown little response to the news, currently up around 2.59% on the day, though showing no upward movement since Chia’s announcement at around 13:30 UTC, according to CoinMarketCap data.
Edited by Aoyon Ashraf.
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APT quickly retraced the entire move after Musk deleted a tweet saying, “AI APT OTT!”
Aptos (APT) rallied by 7.4% in less than a minute on Friday after Twitter CEO Elon Musk tweeted, “AI APT OTT!”
“APT,” in this context, however, was an acronym for Advanced Persistent Threats, not the Aptos token, and APT retraced the entire move higher after Musk deleted the tweet one hour later.
This is not the first time Elon Musk or companies he’s associated with have moved crypto markets. Only days ago, Twitter changed its logo from the blue bird to the Shina Inu dog that represents dogecoin, sending that memecoin surging as much as 35%. The logo has since been switched back.
Even with the retracement, Aptos, which is the native token of the Aptos blockchain, remains up by 8.2% over the past 24-hours alongside gains for much of the altcoin market following Ethereum’s successful Shanghai upgrade.
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APT has now rallied by more than 89% since its debut in October 2022.
The company, based in Austin, Texas, says the new offering is the first bitcoin trust that takes advantage of Bitcoin’s multi-signature capability.
Bitcoin financial services firm Onramp has launched a spot bitcoin (BTC) trust for high net worth investors, that takes advantage of the cryptocurrency’s multi-signature (multisig) capability to enable what Onramp calls multi-party custody – where a group of separate custodians each hold a private key in a multisig arrangement.
Onramp has recruited qualified custodian Kingdom Trust and bitcoin financial services firm Unchained Capital to create a 2-of-3 multisig model, meaning two of those three entities will need to sign a transaction in order to move client funds. The goal is to give clients direct exposure to bitcoin without the hassle of self-custody or the risk of trusting a single custodian.
Each unit of the trust will be equivalent to one BTC and clients will be able to process in-kind redemptions, where they redeem the underlying asset (bitcoin) without triggering a taxable event.
Bitcoin exchange traded funds (ETFs) in the U.S. are currently not allowed to hold bitcoin directly and typically hold bitcoin futures contracts instead. Other investment funds like the $18.7 billion Grayscale bitcoin trust (GBTC) – the world’s largest bitcoin investment fund – do hold BTC but don’t allow in-kind redemptions.
Grayscale ceased redemptions in 2014, citing compliance with Securities and Exchange Commission regulations, although some, including Onramp and hedge funds like Fir Tree Capital Management, argue Grayscale’s stopping redemption was self-imposed.
“GBTC did do redemptions,” Michael Tanguma, CEO and co-founder of Onramp told CoinDesk. “They stopped doing them back in 2014/2015 as they wanted to accumulate AUM [assets under management].”
The inability to redeem has been a source of disgruntlement for institutional investors like Fir Tree, which has sued GBTC over the matter. Tanguma says Onramp’s in-kind redemptions (which can be processed after an initial 12-month lockup period) and multi-party custody arrangement sets it apart from Grayscale and offers a new model for bitcoin custody.
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“It’s essentially the product GBTC should have been,” Michael Tanguma, CEO and co-founder of Onramp told CoinDesk. “And I believe it will be the future of how bitcoin is custodied.”
When asked whether Onramp would need SEC approval to start the redemptions and if so why the regulator would approve the plan, Tanguma responded: “It does not require formal approval because bitcoin is a commodity as per the CFTC, not a security. With that, Onramp does plan to work with securities lawyers to get opinion letters in place to reduce the 12-month lock-up period for redemptions, and will work with all regulators to make sure Onramp stays compliant in all jurisdictions where it offers its services.”
The Singapore firm is one of the largest bitcoin miners in the world with 16.2 EH/s of hashrate.
Bitcoin miner Bitdeer listed today on the Nasdaq after several delays, to lukewarm reception, as the shares of the miner, under the ticker BTDR , lost almost 30% of their value, trading around $6.81 at the time of publication.
The stock was halted shortly after market open, several times, for volatility. Other crypto mining stocks saw single-digit upticks in their share value at the same time frame.
Its merger with a special-purpose acquisition vehicle (SPAC), called Blue Safari Group Acquisition Corp, was approved on Tuesday.
The Singapore-based firm is one of the largest miners in the world, shows a March prospectus filed with the U.S. Securities and Exchange Commission. It has six mining sites across Washington state, Texas, Tennessee and Norway, with a total energy capacity of 775 megawatts (MW) as of the end of 2022, about less than what it had estimated in February 2022. Its hashrate or computing power at the end of January stood at a total of 16.2 exahash per second (EH/s), second only to bankrupt Core Scientific (CORZ) and higher than Riot Platforms (RIOT) and Marathon Digital Holdings (MARA).
About one quarter of that is used for self-mining, meaning it keeps the bitcoin rewards, whereas the rest is given out for cloud mining, meaning customers rents its machines and reap the rewards.
Bitdeer was born out of the world’s largest rig manufacturer, Bitmain, when after a spat between the two co-founders, one of them left and took Bitdeer. Another cloud mining firm also affiliated with Bitmain, BitFuFu, is also in the process of going public via SPAC, but has delayed the listing.
Bitdeer’s, along with other bitcoin miners, financial performance deteriorated in 2022, in part due to worsening market conditions. The firm reported revenues of $330.3 million, and a loss of $62.4 million for 2022, compared with $394.7 million in revenue and a profit of $82.6 million the year before, according to the prospectus filing.
The miner is going public at a better time than last year as market conditions have improved, with bitcoin passing the $30,000 mark and mining equities in many cases outperforming the digital asset in percentage growth. In the future the “market will begin to shift from not only focusing on operators with the biggest scale, but also operators with the best unit economics,” said investment bank Stifel Nicolaus’s analyst Bill Papanastasiou.
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The department will explore economic growth, investment and business opportunities in these areas, as well as implications on regulation.
The U.K.’s newly formed Department of Science, Innovation and Technology will advance the country’s metaverse and Web3 strategy, an individual familiar with the matter not authorized to speak publicly told CoinDesk.
The country’s 2023 Spring Budget, released in March, said the government wanted to “lead on the future of web technology, sometimes known as Web3 or the metaverse.” The new tech department, set up in February, will lead the charge in this work. The department’s work will not focus on specific technologies like blockchain and virtual reality but will instead look at potential economic growth opportunities, investment and business models associated with concepts including the Metaverse and Web3, along with implications for regulation, according to the source.
The metaverse, which is a collection of virtual worlds where people can buy and sell things, was described as a $13 trillion dollar opportunity by investment bank Citigroup. Meta – formerly known as Facebook – dove into the sector, shifting much of its operations to focus on building the metaverse, though the recent crypto winter has put a damper on its growth.
The U.K. government has said its science and technology framework will be supported by more than 370 million British pounds ($463 million) in new funding “to boost infrastructure, investment and skills for the U.K.’s most exciting growing technologies, from quantum and supercomputing through to artificial intelligence.”
It’s not clear how much of that money has been dedicated to the tech department and its metaverse work. Prime Minister Rishi Sunak, who had previously vowed to turn the country into a crypto hub, said the department was put in place to turn scientific and technical innovations into “practical solutions to the challenges we face.”
CoinDesk has reached out to the Department of Science, Innovation and Technology for comment.
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Celsius Network contacted 130 interested parties and signed confidentiality agreements with 40, before choosing NovaWulf.
Digital asset investment firm NovaWulf is poised to take over all assets belonging to bankrupt crypto lender Celsius Network and roll them into a new company, once its creditors have been paid out.
NovaWulf will manage the new company for five years, which will have a new name and a new board of directors, and will be traded through a fairly untested method of putting tokenized equity on blockchain. The five-year management term can be renewed. The board of directors will be chosen by NovaWulf and the official committee of creditors, which represents their interests in the bankruptcy. The plan could take effect as soon as June 30.
NovaWulf has committed $45 million in the transaction, but the Celsius assets it will manage could be worth as much as $2 billion, according to Marc D. Puntus, co-head of Centerview Partners, the investment banker working with Celsius during the bankruptcy case. The assets in question include Celsius’s mining unit, its loan portfolio, staked cryptocurrency, and other alternative investments, according to court filings.
However, the team will have a big task ahead of it – turning around one of the most spectacular collapses in crypto history. The leadership sees the bankruptcy process as a way to turn over a new leaf, and then some.
“What I’m really most excited about is the flexibility to be in a position to play offense, when you have an entire industry that’s playing defense,” given that major crypto firms are either in bankruptcy or facing regulatory scrutiny, said NovaWulf co-founder and managing partner Jason New.
Celsius contacted 130 interested parties and signed non-disclosure agreements with 40, before choosing NovaWulf, according to filings.
NovaWulf is related to TeraWulf (WULF), a publicly traded mining company. The two firms share their two co-founders, who don’t have any formal executive roles at NovaWuf, only in the miner – Nazar Khan, who is also the miner’s chief operating officer and chief technology officer, and CEO Paul Prager. NovaWulf’s team has had experience with complicated bankruptcies such as Lehman Brothers.
Tokenized equity
The tokenized equity of the new company will be traded on-chain and outside of stock exchanges. It will however have to follow SEC disclosure rules, which should make its workings more transparent. Just a month before Celsius filed for Chapter 11, industry commentators were disapproving of its opacity.
The equity tokens will be sold on the Provenance Blockchain, according to a presentation filed with the bankruptcy court. Figure Technologies will also provide infrastructure for the tokenized securities.
General earn creditors, with claims below $5,000, will see 70% recovery of their claims in liquidy crypto, the presentation said. Up to 100% of the rest of the assets, minus what is needed to run the new company, will be dispersed to earn creditors with claims over $5,000, who will also receive tokenized securities of the new company.
Total overhaul
Taking on Celsius’ new chapter requires a certain amount of house cleaning: The new firm will have a new name and none of the pre-bankruptcy leaders will be involved, said NovaWulf’s New.
Celsius’s leadership has been slammed for its risky management online and offline, including in a report from a court-appointed examiner after the bankruptcy.
The mining business was, in former CEO and founder Alex Mashinsky’s view, a way to increase yield on customer deposits, according to the report. By June 2022, Celsius had lent out $579 million in Celsius Mining, its wholly owned subsidiary that was established in 2020, and forwarded another $70 million loan shortly before the bankruptcy, the report said.
Celsius was also using stablecoins bought with user funds as collateral to fund “the entire mining asset,” said CEO Chris Ferraro in a Slack message according to the examiners’ report. The company was doing the same to prop up other parts of its business.
By spring of 2022, some of the company’s senior management thought that an initial public offering (IPO) of the mining business could be used to plug a $1.1 billion hole in its balance sheet, along with the sale of other “non-balance sheet assets.”
But the value of the mining unit dropped from $2 billion to $2.9 billion in August of 2021, to $500 to $700 million at the time of the bankruptcy, meaning even if an IPO or sale had gone through, it likely wouldn’t have sufficed to plug in the balance sheet hole.
Risk management and an overreliance on third parties, known as hosting firms, formed Celsius’s mining’s Achilles heel.
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The new management will look to vertically integrate the mining business, which now counts about 120,000 machines. At least initially, they will be looking for hosting agreements, but a focus will be to set up their own hosting capacity down the line to better control risks and costs.
Asked whether the new firm will be working with TeraWulf for hosting, New said it wouldn’t.
A report noted an increase in spot DEXs offering derivatives trading on their platforms.
Crypto derivatives trading volumes across both centralized and decentralized exchanges rose for a third consecutive month in March, the first three-month streak since at least January 2022, according to figures from CCData.
Crypto derivatives are financial contracts such as futures and options that relate to cryptocurrencies. They are popular because they allow market participants to hedge their positions or to speculate on market direction.
Derivatives trading accounted for about 74% of the roughly $4 trillion crypto market volume last month, the data show. While the bulk of derivatives trading took place on centralized exchanges, decentralized exchanges accounted for $68.7 billion, with dYdX taking a 62.6% share.
“We expect decentralized derivatives protocols to continue performing well and gain market share in the next quarter,” said CCData in a report.
There has been an increasing trend of spot DEXs adding derivatives trading to their platforms as they notice the potential of derivative DEXs, according to CCData.
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In March, DEX PancakeSwap announced it was partnering with ApolloX to introduce trading of perpetual swaps. Quickswap, a decentralized exchange built on Polygon, is also launching perpetual products soon, CCData said.
The spike coincided with a bevy of financial institutions joining Avalanche’s Evergreen subnet “Spruce.”
Layer 1 blockchain protocol Avalanche is picking up steam, reaching a six-month high in daily active addresses earlier this week.
According to blockchain data firm Artemis.xyz, Avalanche’s daily active addresses hit nearly 80,000 on April 12. Its daily active user base grew 85% in the past 90 days, making it one of fastest growing protocols, ahead of BNB Chain, Tron, Ethereum, Aptos and Bitcoin. Only four protocols grew faster, per Artemis: StarkNet, Arbitrum, Stacks and Canto.
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The high watermark coincided with Avalanche’s April 12 partnership with a bevy of financial institutions that will contribute to its network infrastructure, signaling traditional finance companies’ increased interest in the Avalanche ecosystem.
The price of Avalanche’s native token AVAX stands at $18.53 at press time, down 1.34% in the past 24 hours, per CoinDesk data. Avalanche is the seventh largest blockchain by total value locked, which currently sits at $878.7 million, according to crypto stats website DefiLlama.
The rebalancing comes as ether rallies off a successful Shapella upgrade.
Decentralized reserve crypto project Olympus will increase holdings of “volatile assets” such as ether (ETH) in the treasury backing its OHM token after member approval Friday of a new Treasury Framework.
“We’re targeting 75% stablecoins and 25% directional exposure,” said an analyst on the Olympus treasury team who goes by the screen name Relwyn. That’s a change from the 79%-21% breakdown comprising Olympus’ $200 million treasury of stablecoins, volatile assets and protocol-owned liquidity.
The tweaking will give Olympus more exposure to ether, which at $8.4 million Friday was already the largest “volatile asset” in the reserve treasury backing OHM. Ether rallied hard this week after the much-anticipated Shapella upgrade failed to trigger the mass sell-off many traders had feared would come from a flood of newly unlocked ETH.
This shift is unlikely to be as “aggressive” on ETH that the framework’s authors said many community members called for. It will, however, result in a decrease in Olympus’ exposure to so-called stablecoins such as DAI that faltered during the March banking crisis.
“Treasury team recognizes the need for Olympus to decrease reliance on stablecoins with centralized backing,” the proposal read. “Increasing ETH exposure marginally is one step in that direction while not undermining the relative stability of OHM’s backing in the near term.”
Relwyn said the treasury operations team “agrees” with community members’ bullishness, but cautioned the protocol can’t just YOLO everything into ETH without incurring a hearty dose of risk. Number may go up right now, but “number can go down, too,” said Relwyn,
Another reason for the measured approach is operational, Relwyn said, noting Olympus’ mechanisms for rebalancing OHM’s backing could get wonky if the treasury’s ether holdings grow too large. Those mechanics currently price OHM in DAI, by far the treasury’s largest crypto holding at nearly $80 million.
“If it priced itself in ETH, it could have more heavy ETH backing,” Relwyn said. “Mixing the two can be dangerous” for how Olympus manages its so-called range-bound stability.
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The vote passed with nearly unanimous approval midday Friday. Seventy-six wallets that together held 23,000 OHM tokens participated in the vote.