The most important industry news and detailed analysis of the cryptocurrency market in GetBlock Magazine's weekly review

New date for The Merge of ETH and Russians’ plans to buy crypto. Main events of the week

26.08.2022

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14 min

Bitcoin has fallen by 1б65% over the past seven days. The asset reached the highest values on August 19, when 1 BTC was trading at $23 208, the lowest values were recorded on August 20 — $20 761 per coin. The bitcoin exchange rate is $21 425 as of August 26, 8:50 UTC (according to Binance).

The value of the second most capitalized cryptocurrency, Ethereum, has declined 4,18% to $1658 over the past seven days. The native token of the cryptocurrency exchange Binance (BNB) rose 3,84% to trade at $296,06.

The total capitalization of the crypto market fell from $1,144 trillion to $1,085 trillion for the week, with bitcoin dominating at 38,08%. Ethereum's share is 18,6%.

Integration of cryptocurrencies in 90 million stores around the world

The CEO of Mastercard payment company Michael Miebach announced a collaboration with cryptocurrency exchange Binance, within which more than 90 million stores around the world will be able to accept cryptocurrency as payment. In his view, making everyday purchases with cryptocurrencies is one way to unlock the potential of blockchain technology.

At the moment, the parties have already started working in Argentina, launching plastic debit cards for citizens. Binance Card holders can top up their accounts in cryptocurrency, including bitcoins and BNB, which are automatically converted into fiat. The project is in beta testing, but according to the exchange representatives, it will soon become available to a wide audience.

Launch of a crypto exchange by Samsung and other Korean companies

Seven large brokerage firms in South Korea began preparations to create their own crypto exchanges, which will be launched in the second half of 2023. The firms submitted applications for preliminary approval of virtual asset exchange platforms. Samsung is exploring the blockchain-based security tokens market, and Mirae set up a subsidiary to hire technical staff.

The entry of major players into the crypto market signals a softening of policy on digital assets by new President Yoon Suk-yeol, who took office in May. At the time, he said he would seek a delay in the introduction of a tax on profits from crypto investments until consumer protection was in place. The tax was originally set to be introduced in early 2022.

Binance's collaboration with government agencies

Cryptocurrency exchange Binance launched a system to assist government regulators and law enforcement agencies called the Law Enforcement Request System (LERS). Government representatives will be able to send requests to the platform to provide information about users needed as part of investigations.

Each request will be reviewed on a case-by-case basis, taking into account terms of use and applicable laws. Access may only be granted as part of professional activities, and unauthorized requests may result in prosecution. The exchange will, however, notify users of requests made against them, unless a court or police order states otherwise.

Ethereum transition to PoS

Ethereum network developers updated the roadmap for The Merge upgrade, which will change the consensus algorithm from Proof of Work (PoW) to Proof of Stake (PoS). According to the document, the transition could take place as early as September 10, rather than September 15 as previously expected. The algorithm change will be done in two stages: the first upgrade, called Bellatrix, will be released on September 6 at 11:34:47 UTC, in case of its successful integration, the second upgrade, Paris, will be launched.

The Chicago Mercantile Exchange (CME) announced plans to launch options on Ethereum. This will happen on September 12, subject to regulatory review. CME representatives noted that the launch of the new product is based on the significant growth and high liquidity of existing ETH futures, which already have over 1,8 million contracts.

Bitfly, an operator of Ethereum’s largest mining pool called Ethermine, will stop supporting the asset’s mining on the Proof-of-Work (PoW) consensus algorithm. The decision came in line with the network’s planned transition to the Proof-of-Stake (PoS) algorithm. After PoW mining is completed, only withdrawal mode will be available on the pool. The countdown timer is located in miners’ personal accounts, they can continue mining Ethereum on PoW until the counter is zeroed out.

Cryptocurrency exchange Bitfinex announced the launch of trading of potential Ethereum fork tokens based on PoW and PoS. The company has designated the assets as ETHW (PoW) and ETHS (PoS), and they are available on the derivatives platform. Customers can create assets in exchange for an equivalent amount in ETH, a reverse conversion is available at any time.

Binance announced the cancellation of the standard 0,1% fee for spot trading of Ethereum in a pair to the Binance USD (BUSD) stablecoin. The promotion will last one month — from August 26, 00:00 UTC to September 26, 00:00 UTC. Binance explained the lowering of the entry threshold by the fact that they expect a large influx of users as the network upgrade approaches.

Ahead of the upgrade, the Ethereum Foundation increased rewards for detecting vulnerabilities on the network, with a four-fold multiplier applied to all payouts from August 24 to September 8, 2022. Participants will receive up to $1 million when critical bugs are discovered in an upcoming upgrade. Rewards of up to $8 000, $40 000, and $200 000 will go to those who detect low-, medium- and high-risk bugs, respectively.

Binance presented two scenarios for ETH coins in connection with the upcoming upgrade. If there is no algorithm change in the existing Ethereum network (to PoW) following the upgrade, the platform will resume depositing and withdrawing ETH and ERC-20 tokens as soon as possible. Providing a split into two blockchains and a successful algorithm change, the ticker “ETH” will be used for the network on PoS, and users will also be credited with 1:1 hard fork tokens based on a snapshot of the balance at the time of the second phase of the upgrade, called Paris.

Stablecoin and CBDC news

Tether Limited intends to change the way it issues reports on its USDT stablecoin reserves and publish them on a monthly rather than quarterly basis. In July, Tether began working with BDO Italia, part of the accounting firm association Binder Dijker Otte. A Q2 audit found a 58% drop in commercial paper from the previous quarter, from $20 billion to $8,5 billion. The issuer's total assets exceed its consolidated liabilities, at $66,4 billion and $66,2 billion, respectively.

United Texas Bank CEO Scott Beck proposed that only licensed banks should be allowed to issue US dollar-backed stablecoins. He noted that stablecoin issuers must meet the same standards as insured depository institutions. Beck said that banks have the expertise and legal framework to handle money, and unlike today’s stablecoin market participants, banks are heavily regulated at the state and national levels.

On August 23, China officially launched the second phase of testing the digital yuan. Now it can be used to pay for public transport fares. To do this, it is necessary to scan a QR code that will take the user to the application e-CNY to confirm the transaction. So far, the innovation applies only to 10 routes in the city of Guangzhou and the subway in Ningbo.

The situation with Tornado Cash

On August 20, a rally was held in Amsterdam against the arrest of Alexey Pertsev, the developer of Tornado Cash crypto mixer. More than 50 people took part in the action. Pertsev was detained in the Dutch capital on August 10 on suspicion of involvement in laundering money from hacking through Tornado Cash. Participants in the rally stressed that Pertsev is just a developer who is not responsible for any further use of the code by attackers.

The founder of the Cardano network Charles Hoskinson expressed support for the developers of the Tornado Cash cryptocurrency mixer. He also criticized the US government’s decision to put the mixer on the sanctions list because it was being used by criminals to launder money. Hoskinson noted that developers can write open source code but they cannot control how people will use it, so banning the service is “an extremely dangerous precedent.”

Journalists from The Washington Post reported that Tether Limited (the issuer of the largest stablecoin by capitalization, USDT) does not blacklist USDT accounts associated with Tornado Cash and other cryptocurrency mixers that have been sanctioned by the US authorities. This is evidenced by the data of aggregator Dune Analytics. In addition, Tether CTO Paolo Ardoino said that the US sanctions rules do not apply to the company’s operating jurisdiction.

NFT and metaverse news

Blockchain game STEPN and football team Atletico Madrid in collaboration with crypto platform WhaleFin will release a collection of non-fungible tokens (NFTs) on August 26. It will include 1 001 pairs of NFT tokens for the STEPN app. The collection includes 850 common, 140 uncommon, and 11 rare tokens. NFT holders will be entered into a drawing for tickets to Atletico Madrid's home games with paid travel and hotel stays by default. Those who buy unusual sneaker tokens will receive prize jerseys from the club.

According to a report by analysts at Dune Analytics, Nike became the leader in NFT trading among major brands. Its total sales were $185 million. Other brands such as Dolce & Gabbana, Tiffany, and Gucci combined to earn $25 million from token sales. In total, Nike had 67 250 NFT-related transactions, Dolce & Gabbana had 9 036, and Gucci had 3 993.

Telegram founder Pavel Durov suggested launching a marketplace to sell domain names of messenger users, as well as links to groups and channels. The auction could be launched on the basis of “NFT-like smart contracts.” Durov added that the platform will be based on the TON blockchain, as it is able to provide scalability and speed for decentralized trading. In addition, the messenger’s team can develop secure smart contracts on TON, as it has previously developed a language to write them.

Decentralized exchange (DEX) Uniswap announced loans secured by non-fungible tokens (NFTs). According to a Twitter post by Uniswap's head of NFT products Scott Lewis, the company is now in talks with several lending protocols. He emphasized the exchange's interest in addressing liquidity issues and the lack of an aggregator of data on the price changes of non-fungible tokens.

Investment company Invesco launched a fund focused on the metaverse. The Invesco Metaverse fund will invest in large, medium, and small-cap companies in the US, Asia, and Europe that create or develop virtual worlds. The fund will be managed by Tony Roberts and James McDermottroe, members of Invesco's UK Asia equities unit.

The Beijing authorities presented a plan for the development of metaverses for the years 2022-2024. The document refers to the metaverse as a new generation of information technology and innovation integration that will drive the development of the Internet in the direction of Web 3.0. The initiative provides for the creation of technological infrastructure and support for its use in various fields, including education and tourism.

From the world of mining

US congressmen requested data from major public mining companies — Core Scientific, Riot Blockchain, Marathon Digital, and Stronghold Digital — on the environmental impact of their operations. Officials expect to receive information on how each company is mitigating negative environmental impacts and what steps it is taking to ensure that cryptocurrency mining does not further burden the country's energy system or alter climatic conditions.

Since the beginning of the Persian calendar year (March 21, 2022), Iranian police have discovered and confiscated 9404 illegal cryptocurrency mining devices in various areas of Tehran. Most of the rigs, about 7000, were confiscated in June.

Since the beginning of 2022, more than 9000 devices for illegal mining of cryptocurrencies have been confiscated and removed from the combined heat and power plants (CHPs) of Baikalsk and the village of Ust-Ordynsky in the Irkutsk region. The authorities of the region said that illegal mining increases the risks of power outages and poses a threat to fire safety. In 2022, energy companies filed more than 400 lawsuits to recover funds from citizens who illegally used the mining equipment. The court has already approved claims totaling 100 million rubles.

Russian market news

According to a survey by crypto company Tangem, 31% of Russian citizens intend to invest in cryptocurrency in the next six months. At the same time, about one-third of Russians (30%) do not intend to buy cryptocurrency at all, the remaining 39% are still undecided. However, only 6% of the residents of the Russian Federation (by their own estimates) are well versed in the topic of cryptocurrencies, 80% are familiar with the term itself, 45% are positive about cryptocurrencies, 46% are neutral and 9% are negative.

The most popular motivations for buying were the desire to explore a new investment instrument (68%), to preserve funds (22%) and to diversify investments (19%). 18% of respondents bought cryptocurrencies to pay for goods and services, while another 16% bought them to protect themselves from price fluctuations and inflation and to play on exchanges.

The Moscow Exchange is working on its inclusion in the register of information system operators of the Bank of Russia, which will allow it to issue DFAs. According to Artem Zheleznov, Managing Director for Strategy and International Presence of the Moscow Exchange, industrial groups, which are major customers of the site, are interested in such deals. He predicts that the exchange will be included in the register by the end of the year. The first deal with digital financial assets is also planned for this year.

Bitcoin exchange rate predictions

Matt Hougan, chief investment officer at Bitwise Asset Management, said that the bitcoin rate could rise to $500 000. In his view, BTC will approach the market capitalization of gold, which exceeds $11 trillion. Hougan also believes that the figure will grow faster and faster, as bitcoin, in his opinion, is superior to gold as a store of value.

Raoul Pal, Real Vision TV CEO, said that the total capitalization of the cryptocurrency market could increase to $200 trillion in the next ten years. According to him, the number of users of digital assets also has a chance to reach 4-5 billion. Among other things, Pal attributed this to the implementation of CBDC.

Analyst firm Santiment Feed expects the cryptocurrency market to rise again. According to the experts, there are a large number of short trades on exchanges, as traders fear that the market will once again fall to June levels. The analysts believe that such a situation could give impetus to a further rise in the price of bitcoin.

Cryptocurrency analyst Justin Bennett reported a possible 30% drop in the bitcoin rate. According to the expert, the first cryptocurrency has fallen below its diagonal support, which has kept BTC bullish for the past few months. The analyst believes that these indicators resemble the correction of BTC in May and June this year. That said, according to Bennett, bitcoin could see a short-term rally to $23 000, then the asset’s price should drop to $19 000.

Crypto trader Michaël van de Poppe compared the recent sell-off in the crypto market to the bottom of the 2018 bear market. He analyzed a chart that shows the total market capitalization of all crypto assets. According to the analyst, the chart could retest the 200-week moving average (MA) as it did during the 2018 crypto bottom. He noted that after a bounce from the 200-week MA, the chart will make a retest, then a higher low will be formed, after which growth may begin.

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Author:

Michael Golikov Michael Golikov

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