CoinDesk Crypto

As the coronavirus takes its devastating toll on the U.S. economy, financial pros are increasingly confounded by the markets. 

The economy is in its worst shape since the early 20th century, and stocks are soaring. The U.S. government’s borrowing is expected to triple to a record $4.5 trillion this fiscal year, yet 10-year Treasury yields are close to historic lows.

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Related: CME Rises in Bitcoin Futures Rankings as Institutional Interest Grows

A report Thursday showed that U.S. jobless claims fell to 963,000 last week, the first weekly figure below 1 million since March. But in the topsy-turvy logic of financial markets, the improvement was seen as neutral or even negative – since it might relieve pressure on authorities to speed up more trillion-dollar stimulus packages.  

“The good news may be bad news now,” Chris Gaffney, president of world markets at TIAA Bank, told Bloomberg News. 

Bank of America analyst Athanasios Vamvakidis acknowledged last week in a report that it was hard to tell if the dollar’s recent slide in foreign-exchange markets was due to ebullience over easy Federal Reserve monetary policies – or fears that the U.S. currency might be at risk of losing its status as the dominant world currency. 

What’s striking is that, through it all, crypto traders have stayed almost unequivocally bullish. 

Related: Ripple CEO Hits Out at Reports Claiming Firm Is Pivoting From Interbank Payments

Bitcoin is up 64% in 2020, more than double the gains for record-breaking gold. Prices for ether, the native token of the Ethereum blockchain, have tripled this year, thanks to the fast growth in decentralized finance, known as DeFi, and in digital “stablecoins” linked to U.S. dollars.  

John Todaro, director of research at cryptocurrency analysis firm TradeBlock, noted in an email Thursday that the market value of 10 digital tokens associated with DeFi has quintupled this year to almost $10 billion. 

Lennard Neo, head of research at Stack Funds, wrote Thursday in a report that bitcoin might do well in any of the currently plausible market scenarios: “Bitcoin could be a ‘risk-on hedging-type asset,’ where it performs relatively well in thriving markets, yet acting as a hedge to global uncertainties, displaying financial attributes that fall in between that of equity and gold.”

Trading volume on Mexico’s leading cryptocurrency exchange has quadrupled this year. The number of bitcoin “whales” holding at least 1,000 bitcoin tokens is at its highest since August 2017, according to CoinDesk’s Omkar Godbole. 

Mentions are becoming more common in mainstream financial publications. The Financial Times reported Thursday that crypto hedge-fund managers have returned more than 50% through July, compared with the low-single-digit gains that hedge funds generated across traditional asset classes.

Barstool Sports president Dave Portnoy, who has gained a following this year for live-streaming profanity-laced trading sessions to millions of retail day traders, reportedly owns $1 million of bitcoin after meeting with the Winklevoss twins, founders of the Gemini cryptocurrency exchange.

It’s all become so bizarre that some cryptocurrency analysts acknowledge even they can’t really make heads or tails of the markets these days. 

“Ultimately, when it comes to investing in this environment, the risk factor is through the roof,” Mati Greenspan, founder of the cryptocurrency research firm Quantum Economics, told subscribers Thursday. “All risk metrics and meters have long been broken, so we really need to approach all investments with extreme caution right now.”

That’s probably the safest interpretation. 

Bitcoin Watch

Bitcoin printed gains for the second straight day on Thursday, despite risk aversion in the stock markets. Even so, the immediate bias remains neutral, with the cryptocurrency still trapped in an ascending triangle (above left). 

The current consolidation could end with a bullish breakout above $12,000, as ether, the second-largest cryptocurrency, has jumped to fresh multi-month highs, confirming a bull flag breakout, or a bullish continuation pattern on its daily chart. That could be taken as a positive signal for bitcoin, as ether has recently led the market higher with its DeFi-led price rally. 

Supporting the case for the bullish breakout in bitcoin is the recent surge in institutional participation. Open interest in futures listed on the Chicago Mercantile Exchange (CME) rose to a record high of $841 million earlier this week and is up by over 100% over the last four weeks, according to data source Skew. 

A triangle breakout, if confirmed, would shift the focus to resistance at $12,325 (August 2019 high). The short-term outlook would turn bearish if buyers fail to defend the lower end of the triangle, currently at $11,280. That could encourage selling and lead to a deeper decline toward the Aug. 2 low of $10,659. 

Token Watch

XRP (XRP) – One of the largest cryptocurrency projects by market value is “still trying to find compelling uses” eight years after its launch, according to the Financial Times. Ripple CEO Brad Garlinghouse said it may take “years” to develop “a lot of utility through XRP.” Michael Arrington, a crypto hedge-fund manager, told the FT that Ripple’s efforts to work with banks is “like Uber trying to disrupt the taxi industry by working with the taxis.” The XRP token is underperforming this year, up 45% versus bitcoin’s gain of 59%.  

Band Protocol (BAND) – The much-awaited “oracle” token started trading Thursday on the big U.S. cryptocurrency exchange Coinbase, according to CoinDesk’s Danny Nelson. The token’s price has surged more than 10-fold since the start of May, according to CoinGecko. Oracles provide price feeds for semi-automated DeFi lending and trading platforms. As previously reported by First Mover, the Band Protocol is being watched closely by cryptocurrency traders and analysts as a potential rival to Chainlink, whose  LINK token has also jumped 10-fold in price this year, and is most valuable among digital assets with a market cap of at least $1 billion. 

Yam (YAM) – The DeFi protocol was “a Frankenstein of other DeFi protocols,”  according to the data firm Messari. It was a “blaze of social media-hosted meme-economy glory,” wrote Mati Greenspan of Quantum Economics. The Defiant, a newsletter, dubbed it the “YAMpocalypse.” Here’s what happened with Yam this week, according to CoinDesk’s Will Foxley and Paddy Baker: The project launched Tuesday, and the next day prices for the token shot up to $160. Early Thursday, a critical bug was discovered that effectively killed it, and the market value  tumbled by $60 million in 35 minutes. “The longer it takes you to do due diligence in this cycle, the lower your alpha,” Amentum Capital co-founder Steven McKie told CoinDesk. 

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How DeFi ‘Degens’ Are Gaming Ethereum’s Money Legos (CoinDesk)
First there were Tendies and YFI. Then came (and went) YAM. And, as of yesterday, we have Based Money.  Meet the new decentralized finance, in what amounts to a crossover between massive multiplayer online games and crypto pump-and-dump schemes.

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The U.S. Department of Justice announced the “largest ever seizure of terrorist organizations’ cryptocurrency accounts” on Thursday, including millions of dollars and 300 crypto accounts.

Related Stories

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The Chicago Mercantile Exchange (CME) has leapt up the listings to become the third-largest bitcoin futures exchange by number of open contracts.

• As of Thursday, open interest (or open positions) on the CME stood at $800 million – up nearly 120% from the July low of $365 million.
• CME’s 15% contribution to the total global open interest of $5.22 billion on Thursday was the third-highest among the major derivatives exchanges.
• In first and second positions, respectively, OKEx accounted for 23% of the total open interest on Thursday, while BitMEX contributed 18.6%.
• Open interest on the CME had hit a record high of $841 million on Monday.
• Increased activity on the CME shows institutional interest in the cryptocurrency is rising, according to industry experts.

•  A month ago, open positions on the CME were 12% of the aggregate global total.
• Back then, CME was the fifth-largest exchange by open interest and BitMEX was the industry leader.
• CME’s climb is “an indication of increased institutional demand for bitcoin,” said Vishal Shah, an options trader and founder of derivative exchange Alpha5.
• Chris Thomas, head of digital assets at Swissquote Bank, told CoinDesk that institutions prefer to trade futures of any product via an established and regulated exchange like the CME.
• “It’s a norm – institutions understand each part of the trade cycle when trading on the CME and don’t have to set up new processes to manage risks that they would have to while buying physical bitcoins,” Thomas said.
• While open interest on the CME has increased to record highs, daily trading volumes have recently cooled.
• The exchange traded futures contracts worth $347 million on Thursday, down 73% from the high of $1.3 billion registered on July 27.
• “It means there is less price sensitivity for trades on the CME and implies less risk for extremely high bouts of volatility,” Shah told CoinDesk in a Telegram chat.

Range play continues

• Bitcoin is trapped in an ascending channel, as seen on the daily chart.
• A UTC close above $12,000 would confirm a breakout and imply a continuation of the rally from July lows near $9,000.
• A move below the lower edge of the channel may invite stronger selling pressure. 

Also read: Bitcoin Entering ‘New Adoption Cycle,’ Coin Metrics Exec Says

Related Stories

• First Mover: As Wall Street Goes Topsy-Turvy, Crypto Traders Are Bullish as Ever
• Attorney Ordered to Pay Out $5.2M for Bitcoin Escrow Mishap
• Market Wrap: Stuck at $11.5K, Bitcoin Surpasses 25K Locked in DeFi
• Writing Bitcoin Smart Contracts Is About to Get Easier With New Coding Language

Marathon Patent Group has signed a purchase agreement with Chinese mining manufacturer Bitmain to drastically increase output with 10,500 new Antminer S-19 rigs at a total cost of $23 million.

• The Nasdaq-listed mining company announced Friday the new order will see its bitcoin mining capacity quadruple from 3,020 units to over 13,520 rigs.
• Only last month, Marathon agreed to purchase a total of 1,360 rigs – 660 S-19s as well as 700 rigs from rival manufacturer MicroBT.
• The new rigs will be installed this weekend at the company’s facility in Quebec.
• Having started expanding capacity in Q4 2019, the company says it expects the additional hashrate will make its mining facility a revenue-earning venture.
• Bitmain plans to ship 1,000 previously purchased rigs to Marathon in October and November.
• The deal means the Las Vegas-based Marathon will soon become one of the largest operators in the whole of North America, making up 1.2% of total hashrate on the Bitcoin network.
• Marathon’s stock price was up over 12% to just under $4 at press time.

See also: Mining Firm Hut 8 Reports 28% Drop in Q2 Revenue Following Bitcoin Halving

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• Ripple CEO Hits Out at Reports Claiming Firm Is Pivoting From Interbank Payments
• Attorney Ordered to Pay Out $5.2M for Bitcoin Escrow Mishap
• Epic Games Blasts Apple’s ‘Anti-Competitive’ Payments Practices in Lawsuit

A Singapore cryptocurrency industry non-profit has released a code of practice for digital asset payment providers that was guided by the city-state’s central bank

• The Association of Cryptocurrency Enterprises and Start-ups Singapore (ACCESS), a group comprising over 400 crypto and blockchain-related businesses, announced the release Thursday.
• The Monetary Authority of Singapore “facilitated” the initiative, aimed to assist regulatory compliance and enhance crypto industry conduct, while the Association of Banks in Singapore (ABS) also helped with its development, ACCESS said.
• The guidance is designed around the requirements of the country’s Payment Services Act, which was updated early in 2020 to require digital asset businesses operating in Singapore to register for a license.
• Specifically, it attempts to offer a standardized approach to combating money laundering and terrorism financing through know-your-customer (KYC) best practices.
• ACCESS chairman Anson Zeall said the guidance would point both global and local digital payment service providers “in the right direction” and facilitate successful applications for operating licenses under the act.
• The code had been two years in development to ensure it’s “in line with both the interest of our members and that of regulators,” Zeall said in a tweet on Friday.
• The code comes amid efforts to align with the Financial Action Task Force’s June 2019 guidance for global supervisory frameworks for virtual asset service providers.
• The code is expected to “evolve over time” collaboratively and will continue to be updated from “time to time” to ensure relevance, ACCESS said.

See also: Singapore Begins Crackdown on Unlicensed Bitcoin Sellers

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• Marathon Signs New $23M Contract with Bitmain for 10,500 Bitcoin Mining Rigs
• Ripple CEO Hits Out at Reports Claiming Firm Is Pivoting From Interbank Payments
• Attorney Ordered to Pay Out $5.2M for Bitcoin Escrow Mishap
• Epic Games Blasts Apple’s ‘Anti-Competitive’ Payments Practices in Lawsuit

The CEO of Ripple has firmly criticized the Financial Times for saying the creator of the third-largest cryptocurrency was moving away from wholesale cross-border payments.

• On Twitter late Thursday, CEO Brad Garlinghouse said “Ripple has absolutely no plans to ‘reset’ our strategy” and that banks around the world were already using the XRP token as a cross-border payment solution.
• The FT reported Thursday that Ripple was ditching its old solely bank-focused strategy for a more diversified approach – a platform offering payment services for financial institutions and everyday consumers.
• Quoting Garlinghouse, the FT said Ripple would use its XRP token hoard to create whole new use cases and become the “Amazon of the cryptocurrency world.”
• Ripple’s primary aim has been its blockchain interbank settlement layer, which makes cross-border transactions cheaper and faster than traditional wire transfers. Clients can optionally convert fiat currencies into XRP.
• But the FT said its biggest partner, the Spanish bank Santander, recently decided against using XRP for its cross-border solution, supposedly because it wasn’t sufficiently traded in some of its key markets.
• CoinDesk had approached Ripple for comment but hadn’t received a response by press time.

See also: Goldman Sachs Sells $6.5M of Shares in Ripple Partner MoneyGram: SEC Filing

Related Stories

• Marathon Signs New $23M Contract with Bitmain for 10,500 Bitcoin Mining Rigs
• Singapore’s Central Bank Backs New Code of Practice for Crypto Companies
• Attorney Ordered to Pay Out $5.2M for Bitcoin Escrow Mishap
• Epic Games Blasts Apple’s ‘Anti-Competitive’ Payments Practices in Lawsuit

A New York attorney has been ordered to pay over $5 million to a crypto investment firm for dereliction of duty as an escrow agent.

• The agent, Aaron Etra, will have to pay more than $5.25 million plus 4% interest ($59,887) for violating his contractual duties to San Francisco investment firm Benthos Master Fund, according to a document filed at the district court in the Southern District of New York on Wednesday.
• Etra had been employed by Benthos to act as an escrow agent in 2018 and was entrusted with holding $5 million meant for the purchase of bitcoin.
• The firm had arranged the bitcoin purchase agreement with a firm called Valkyrie Group, which had planned to buy 10,000 bitcoin from a Russian oligarch, according to Law360.
• When Benthos saw that Etra was moving money out of escrow without authorization, the firm formally requested Etra cease all activity relating to the release of its funds.
• Benthos argued to the court that the attorney released $4.6 million of its funds in violation of Etra’s “contractual and fiduciary duties.”
• As a result, Benthos claims it received none of its expected bitcoin.
• On June 28, 2019, Benthos began arbitration proceedings based on a clause in the escrow agreement.
• Despite receiving formal notice of the bid to resolve the issue, and having communicated with the arbitrator via email, the attorney failed to appear at the March 17, 2020 arbitration hearing.
• The arbitrator then awarded Benthos $5,254,561 on April 9, 2020 which included damages and the cost of arbitration, plus the pre-award interest.
• He had previously been ordered to repay the firm’s remaining $400,000.
• When Etra attempted to appeal the decision as “one-sided” on Wednesday, U.S. District Judge Alison J. Nathan said Etra “only has himself to blame” for having failed to appear or provide evidence.
• Etra “was clearly required to arbitrate any disputes under the escrow agreement” and having failed to do so is now liable, the judge said in a court document filed on Thursday.

See also: Ex-NYSE Broker Accused of Running $33M Crypto Scam Pleads Not Guilty

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• Ripple CEO Hits Out at Reports Claiming Firm Is Pivoting From Interbank Payments
• Epic Games Blasts Apple’s ‘Anti-Competitive’ Payments Practices in Lawsuit
• Market Wrap: Stuck at $11.5K, Bitcoin Surpasses 25K Locked in DeFi
• Writing Bitcoin Smart Contracts Is About to Get Easier With New Coding Language

China is planning a major expansion of testing for the central bank-led digital yuan, according to a Wall Street Journal Report on Friday.

• The country’s Ministry of Commerce said earlier today that the digital currency – dubbed DC/EP, for digital currency/electric payment – would be trialed in major cities across the most developed regions.
• These include Hebei province, the Yangtze river delta, Guangdong province and the cities of Beijing, Tianjin, Hong Kong and Macau.
• The ministry added that some poorer regions in China’s center and west may also be able to join the trial if they can meet specific requirements.
• When the new trials might start was not disclosed, but the ministry reportedly said that the project design is hoped to be wrapped up by the end of this year.
• DC/EP is already being out through its paces in regions such as Shenzhen, Suzhou, Chengdu and Xiong’an, and commercial entities are also helping with the initiative.
• As CoinDesk reported, several firms owned by Tencent are said to be working with the research wing of the People’s Bank of China on testing the digital yuan: food retailer Meituan-Dianping, video-streaming platform Bilibili and ride-hailing startup Didi Chuxing.
• The commerce ministry added that the use of innovative technology, like digital currency and AI, is aimed to boost the nation’s economy, as well as encourage “higher value” industries, the WSJ reported.

Also read: Bank of Japan Forms New Team to Explore Central Bank Digital Currency

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BitMEX, one of the oldest and most controversial cryptocurrency derivative exchanges, announced mandatory identity verification for all users.

• Registering to trade on BitMEX takes “less than 30 seconds,” according to its homepage, where new users outside of restricted jurisdictions are required to enter only an email address, password, and pick a country of residence.
• That will end on Aug. 28 when verification will be mandatory for all users, a process that will include proofs of location, funds, trading experience, and more, according to Ben Radclyffe, commercial director for the BitMEX parent company, 100x.
• The policy change comes with a six-month “grace period” ending in February 2021 to accommodate unverified users completing the process.
• Easy registration, high leverage, and bitcoin-only account balances helped BitMEX bootstrap liquidity from all directions and give rise to its reputation as the destination trading platform for unorthodox cryptocurrency traders.
• The exchange’s primary motivations for this change are to remove barriers to entry for some of its target users, improve the security of the platform, and “get ahead of evolving regulation” in the cryptocurrency industry, Radclyffe said.
• The change also will help BitMEX to better understand its user base, he added.
• BitMEX’s corporate strategy has included plans for mandatory identity verification “for a while,” but running the verification system at scale for all users took time, Radclyffe said on a call with CoinDesk, noting a “material technological lift”.
• The Eden Island, Mahé-based exchange has prohibited U.S.-based traders from using its platform since 2015, and recently blocked would-be traders in Hong Kong, Bermuda, and Seychelles as well.
• Notably, a “good number” of BitMEX users have already verified their identities voluntarily, according to Radclyffe. Individual verification should take no more than five minutes to complete, he said. Corporate verification is a more involved process, however.
• Over the medium and long terms, mandatory identity verification should increase the volume and liquidity on BitMEX, Radclyffe told CoinDesk, even if, in the short term, some traders decide against completing the process.
• Radclyffe also described mandatory identity verification as a “building block” that sets the stage for future BitMEX products and a general “ability to do more.” For example, he told CoinDesk that BitMEX plans to host a “very significant” trading tournament later this year, which will require user identity verification.
• BitMEX, known for popularizing the perpetual swap futures contract among cryptocurrency traders, is currently the second largest cryptocurrency derivatives exchange by open interest, with just less than $1 billion in open bitcoin futures contracts, according to Skew.

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The Securities and Exchange Commission (SEC) announced today that it has charged Virginia- based company Boontech and its founder Rajesh Pavithran for fraud and failure to register the firm’s tokens that were sold as investment securities. 

According to the SEC’s announcement, between November 2017 and January 2018, Boontech sold $5 million worth of its tokens, Boon Coins, to more than 1,500 investors in the United States, without registering the digital asset with the regulatory body. 

• The announcement said the firm and Pavithran made false statements about how they had managed to eliminate volatility for their digital asset by using “patent pending” technology to hedge it against the dollar, despite what the SEC said was the complete absence of such a technology. 
  
• While the firm and its founder claimed that their platform was faster because it was built on a private blockchain, the SEC said that these claims were also false and the firm used the same public blockchain as its competitors. 
  
• Without accepting or denying the charges, Boontech and Pavithran have settled the allegations by agreeing to disgorge $5 million, plus interest, raised by the token sales. The settlement also requires that Boontech destroy all of the Boon Coins in their possession and withdraw them from all digital asset trading platforms.
  
• In addition, the settlement requires Pavithran to pay a penalty of $150,000 and bars him from serving as an officer or director of any publicly traded company. 
  

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Minnesota congressman and chairman of the National Republican Congressional Committee (NRCC) Tom Emmer announced Thursday that next week he will lead the first cryptocurrency town hall to celebrate innovators leading the development of virtual currencies.

• According to the announcement made on Emmer’s campaign website, the town hall is intended to encourage “politically-engaged voters” to take part in the growing digital asset transformation as the election nears.
• The event will feature leaders of the blockchain industry including Circle CEO Jeremy Allaire, Ripple CEO Brad Garlinghouse, eToro’s  managing director Guy Hirsch, BitPay CEO Stephan Pair as well as Bloq co-founder and Chairman Matthew Roszak.
• The announcement said that the panel will discuss “ways to keep the United States on the cutting edge of innovation.”
• Emmer is a member of the House Financial Services Committee, a ranking member of the Financial Technology Task Force, and co-chair of the Congressional Blockchain Caucus.
• The town hall event is organized in partnership with the Chamber of Digital Commerce (CDC) PAC.
• The town hall will be held virtually on Aug. 20 at 12:30 p.m ET and is open to the public. 
• You can register for the event here.

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BBC Studios has issued an exclusive global license to the U.K.-based mobile game publisher Reality Gaming Group to develop a digital trading card game on the ethereum blockchain for its hit sci-fi show, Dr. Who.

• According to Thursday’s announcement, fans will be able to collect and trade digital versions of their favorite characters, and battle friends in the Doctor Who: Worlds Apart game. 
• Trading cards collected by players will be tokenized into non-fungible or unique tokens that cannot be copied, and function as a digital collectible that can be used during the game or be traded between friends. 
• Just like physical trading cards, there will be rare cards featuring the various doctors, their companions, allies and enemies.
• Kevin Jorge, senior producer for Games & Interactive at BBC Studios told CoinDesk via an email that because Dr. Who is one of the most loved and long-running shows on TV, developers will have 56 years’ worth of content to draw from.
• Jorge added that the additional security of blockchain technology will also give fans the peace of mind that they are safe from scams and piracy.
• “The cards will be ERC721 running on a private fork of ethereum, trading on our own marketplace – but we will eventually be running on interacting with ethereum mainnet so that users can withdraw to 3rd party platforms like OpenSea,” Reality Gaming Group co-founder and tech lead Morten Rongaard told CoinDesk via an email.
• Reality Gaming Group debuted its first blockchain powered augmented reality game Reality Clash in 2019, and has over two decades of experience in mobile, PC, augmented and virtual reality gaming platforms, the statement said. 
• According to the announcement, limited edition cards, in packs of five, will be available for purchase from October while the game is set to go live on PC in 2021 with mobile to follow.

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Epic Games has filed suit against Apple Inc. for allegedly monopolizing the in-app payments market and making “innovations” like bitcoin payments all but impossible.

• The developer of hyper-popular video game Fortnite claimed in its suit filed Thursday that Apple is acting anti-competitively by imposing an “oppressive” 30% sales tax on app sales as well as banning third-party payments processors from its platform.
• As a result of Apple’s behavior, it has hurt payment innovation, Epic claims.
• Would-be competing in-app payment processes could accept “bitcoin or other cryptocurrencies” if not for their outright exclusion, Epic Games said.
• Epic Game demanded the U.S. District Court for the Northern District of California prohibit Apple from acting in an anti-competitive manner and end what it called Apple’s stranglehold on in-app payments.
• The lawsuit appears to be a legal volley in a campaign Epic Games began against Apple after the tech giant booted Fortnite from the Apple app store on Thursday.
• Apple cited Fortnite’s Thursday implementation of its own in-app payments system as reason for the boot, according to The Verge.

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The spot bitcoin market was fairly dull Thursday. That doesn’t mean it’s not moving: Holders of the cryptocurrency are increasingly plowing it into decentralized finance.

• Bitcoin (BTC) trading around $11,543 as of 20:00 UTC (4 p.m. ET). Slipping 0.50% over the previous 24 hours.
• Bitcoin’s 24-hour range: $11,274-$11,661
• BTC slightly above its 10-day and 50-day moving averages, a bullish to sideways signal for market technicians.

Little changed in the past day for bitcoin’s price. The top asset in the crypto market is back in $11,500 territory, where it was Wednesday, after briefly bottoming to $11,274 on spot exchanges such as Coinbase. 

Read More: Bitcoin Recovers From $11.3K Despite Losses in European Stocks

Related: Writing Bitcoin Smart Contracts Is About to Get Easier With New Coding Language

However, the state of the options market continues to suggest that traders anticipate a bumpier bitcoin ride over the longer term, according to Chris Thomas, head of digital assets for Swissquote Bank. “Implied volatility has edged higher, but only slightly. This shows that traders are still anticipating another big move, hence preferring long volatility strategies.”

John Willock, CEO of digital asset liquidity provider Tritum, expects bitcoin to move much higher before the year is done, but it will not be a steady upward trend. “There are quite a few psychological barriers to break along the way, especially once we get to $15,000, Willock said. “If our current pace keeps up I could definitely see $16,000 this year,” he added. 

Swissquote’s Thomas also said the options market is currently seeing less institutional interest and more individual traders. He noted retail-friendly platform Deribit’s increase in bitcoin options open interest (outstanding contracts) versus more institutional-focused CME’s relative stagnation.

Deribit is an upstart crypto-only derivatives platform, while CME is a trading stalwart used by the biggest financial players for all types of commodities bets. “This shows that institutional players are standing aside, likely preferring to take a summer break,” Thomas said.

Related: How DeFi ‘Degens’ Are Gaming Ethereum’s Money Legos

Read More: DeFi Frenzy Drives Ethereum Transaction Fees to All-Time Highs

Bitcoiners plow BTC into DeFI

The second-largest cryptocurrency by market capitalization, ether (ETH), was up Thursday trading around $394 and climbing 1.3% in 24 hours as of 20:00 UTC (4:00 p.m. ET). 

Read More: Daily Profitability for Ethereum Miners Hits Over 2-Year High

The amount of bitcoin locked in decentralized finance, or DeFi, surpassed 25,000 BTC Monday, and is currently at 27,027, according to data aggregator DeFi Pulse. 

The top place for parking BTC in DeFI: Wrapped bitcoin, or wBTC, which allows investors to use the world’s oldest cryptocurrency on the Ethereum network. Over 21,000 BTC is locked in wBTC, by far its largest DeFi use. 

Mark Hornsby, chief technical officer for crypto custodian Trustology, told CoinDesk that bitcoin’s role in DeFi could be bullish as investors feel comfortable about its role as the dominant cryptocurrency – and lock more of it inside Ethereum’s network. 

“Due to its dominance, the bitcoin blockchain is an attractive proposition for DeFi,” Hornsby said. “Arguably, the lending and borrowing originating from these ‘wrapped’ instruments could bolster the underlying asset and, thus, bitcoin’s price point,” he added.

Other markets

Digital assets on the CoinDesk 20 are mixed Thursday. Notable winners as of 20:00 UTC (4:00 p.m. ET): 

• chainlink (LINK) + 19.1%
• tron (TRON) + 12.8%
• lisk (LSK) + 11.8%

Read More: Token Sales Are Back in 2020

Notable losers as of 20:00 UTC (4:00 p.m. ET): 

• stellar (XLM) – 1%
• dash (DASH) – 0.89%
• zcash (ZEC) – 0.82%

Read More: DeFi Meme Coin YAM Succumbs to Fatal Bug, Makes Plans for ‘YAM 2.0’

Equities:

• In Asia the Nikkei 225 closed in the green 1.7% as a recovery in global manufacturing numbers boosted stocks in Tokyo.
• In Europe the FTSE 100 ended the day in the red 0.88%, dragged down by losses in banking and commodities stocks.
• In the United States, the S&P 500 fell 0.20% as concerns mount regarding fresh government economic stimulus remaining in limbo.

Read More: Coinbase to Offer Bitcoin-Backed Loans to US Customers

Commodities:

• Oil is down 0.54%. Price per barrel of West Texas Intermediate crude: $43.21.
• Gold was in the green 1.8% and at $1,951 as of press time.

Read More: Elliptic Teams With Fireblocks to Automate Security and Compliance

Treasurys:

• U.S. Treasury bonds were mixed Thursday. Yields, which move in the opposite direction as price, were down most on the two-year, in the red 5.6%.

Read More: Why It’s Time to Pay Attention to Mexico’s Booming Crypto Market

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It was a match made in Silicon Valley heaven. The token-funded startup cLabs just acquired the decentralized finance (DeFi) startup Summa, best known for making wrapped Ethereum tokens that can represent locked amounts of bitcoin.  

The acquihire bolsters cLabs’ multifaceted engineering team, which specializes in Bitcoin, Zcash and Cosmos projects in addition to Celo software projects. 

Marek Olszewski, CTO of cLabs, said the newcomers will help the Celo community “execute on the platform’s interoperability vision.”

Related: Brazil’s Ailing Economy Is Helping Dollar-Pegged Stablecoins Find Traction

“Over the last two years we’ve built the interoperability space from scratch. We’re excited to continue that work with Celo,” said Summa co-founder James Prestwich, whose startup was acquired for an undisclosed amount. 

Read more: Investors on CoinList Pour $10M Into Celo Token Sale in Roughly 12 Hours

With the addition of six people from Summa, cLabs’ Olszewski said there are now 100 people on staff. Along those lines, cLabs engineer Tim Moreton said the goal is to make sure people with established roles in different crypto projects are involved with the Celo community as well. 

Moreton added the priorities for 2020 are smoothing value transfers in and off of the Celo platform, including value from Bitcoin or Ethereum, and getting the Celo mobile app “into the hands of thousands and thousands of people … who don’t have cheap or easy access to financial services, but they do have access to a smartphones.”

Related: Bitcoin News Roundup for May 27, 2020

cLabs has raised more than $40 million so far, through a combination of venture capital and token sales. Much like Facebook’s dwindling Libra project, Celo’s stated goal is boosting financial inclusion in emerging markets. The startup has remote staff working in Latin America, Asia and Africa, in addition to the team in California.

Zack Voell contributed reporting.

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Bitcoin smart contracts are a tricky beast to tame, but a new language is making them easier to write, democratizing them in a sense.

Smart contracts can (among other things) allow users to set extra rules on their bitcoin, requiring these rules be met before the funds can be unlocked. Minsc, created by Bitcoin developer Nadav Ivgi, is a new programming language that makes it easier for developers to create these kinds of contracts so they can build them into bitcoin wallets and other apps more smoothly.

One of the goals of Minsc is to make smart contracts “more accessible to more people,” Ivgi told CoinDesk. That means both developers and users alike are able to take advantage of tools built by developers.

Tier one: ‘Script’ smart contracts

Related: Market Wrap: Stuck at $11.5K, Bitcoin Surpasses 25K Locked in DeFi

Smart contracts were first described by Nick Szabo in the 1990s. He theorized a way of automating legally binding contracts made between people.

Typical examples of smart contracts on Bitcoin include not allowing 0.1 BTC to be spent until 2021, or requiring more than one person to sign off on a transaction before the money can actually move. Smart contracts also power second layers on the Bitcoin protocol, such as the Lightning Network, which could help Bitcoin expand to reach more users.

Thus far, Bitcoin Script is the language that makes these contracts possible. 

The problem is it’s tricky to work with Bitcoin Script. It is unlike other, more popular programming languages developers are used to, making it harder to wrap their heads around and compose in. This lack of understanding also makes it easier to make a mistake, potentially putting Bitcoin at risk. 

Related: Preston Pysh on Why We’ve Entered a Fundamentally New Era of Bitcoin Accumulation

The unwieldiness of Bitcoin Script was one of the factors that led Vitalik Buterin to design the Ethereum platform in the first place. Solidity, Ethereum’s first smart-contract language, was designed to be much easier for developers to read and thus use. And it has paid off: Ethereum has grown to become the go-to platform for smart contract developers.

Read more: How Do Ethereum Smart Contracts Work?

Tier two: Miniscript

Miniscript, released in 2019 by Pieter Wuille, Andrew Poelstra and Sanket Kanjalkar at Blockstream Research, chips away at this issue for bitcoin. 

Read more: Pieter Wuille Unveils ‘Miniscript,’ A New Smart Contract Language for Bitcoin

“One reason that we’re not anywhere close to using Script’s full potential is that actually constructing scripts for nontrivial tasks is cumbersome. It’s hard to verify their correctness and security, and even harder to find the most economical way to write things,” Wuille and Poelstra wrote in a blog post introducing Miniscript in September of last year.

Miniscript offers a language that’s easier to understand than Script, with built-in security guarantees. 

Additionally, if there are two different ways of writing the same contract in Script, Miniscript is able to assess which one is “more economical.”

The computer eventually compiles (or converts) Miniscript to Bitcoin Script, which is what the code ultimately needs to be written in to successfully lock up real bitcoin with these extra restrictions.

Tier three: Minsc

Minsc is the third tier of the cake. It builds on top of Miniscript, taking advantage of its security properties but creating a language that is even easier for developers to read and think about than Miniscript.

“Minsc’s focus is on usability and making it easier to express, comprehend and reason about scripts, using a simple and familiar syntax. It adds additional convenience features and ‘syntactic sugar,'” Ivgi told CoinDesk. 

“Syntactic sugar” is a programming term for adding into a language another easier, shortcut way of executing a task that is usually harder to write.

So Minsc doesn’t add anything new to Script, it just makes it easier to use.

“It doesn’t let you do anything that Miniscript doesn’t already, similarly to Miniscript itself in relation to Bitcoin Script,” Ivgi said.

Bitcoin smart contracts and Minsc: Where will they go next?

Minsc could make it easier for developers to add support for various smart contracts. “The main intended target audience is developers looking to build apps that utilize Bitcoin Script in interesting, advanced ways,” Ivgi added.

Read more: RIF Launches ‘Layer 3’ Network to Scale Bitcoin-Based Smart Contracts, Tokens

If more developers can eventually add support for these smart contracts, more users will (perhaps even unknowingly) be able to use these more-complex contracts as well.

“Initially, however, I anticipate the usage to be primarily experimental and educational. Minsc can be a great tool for people looking to gain a better understanding of Bitcoin Script, as well as for educators teaching the technical aspects of Bitcoin,” Ivgi said.

Ivgi is still in the process of adding other features to the language. Bitcoin’s smart contracting abilities are likely to expand even further, such as with Taproot, a likely upgrade on Bitcoin’s horizon. Minsc will be there to make these contracts easier to create.

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The United States Postal Service (USPS) has moved to patent a novel vote-by-mail elections system secured with blockchain technology.

• An application published Thursday by the U.S. Patent and Trademark Office (USPTO) and filed by USPS on Feb. 7 envisions combining the “dependability and security” of the USPS with blockchain “to prevent tampering” of electronic ballots.
• Saying in the filing that voters want a “convenient” means to access the polls, USPS offers a number of different methods to accomplish this objective.
• Among the various “embodiments” include: mailing out token-linked QR codes; distributing scannable paper passcodes to a digital voting system; storing voter identification on the blockchain; storing electronic voting signatures on the blockchain; and storing the votes themselves on the blockchain.
• Whether any of these proposals could bolster mail-in ballot security or avoid the pitfalls security researchers routinely lob at existing blockchain-backed voting systems was unclear at press time.
• Also unclear was the Postal Service’s intentions for the patent. A USPS press officer did not immediately respond to questions on whether or when USPS would actually test its methods.
• Any change to the United States’ patchwork voting systems would almost certainly proceed down to the state and county level.
• Forbes first reported the news, which comes at the height of a rhetorical standoff between U.S. President Donald J. Trump and the very concept of secure mail-in voting. Trump claims secure mail-in voting to be all but impossible.

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First there were Tendies and YFI. Then came (and went) YAM. And, as of yesterday, we have Based Money.

Meet today’s decentralized finance (DeFi), in what amounts to a crossover between massive multiplayer online (MMO) games, like World of Warcraft, and crypto pump-and-dump schemes.

These aren’t the same DeFi projects launched earlier this summer, said Amentum Capital co-founder Steven McKie. They’re projects are about leveraging Ethereum’s tech for unintended uses. They’re about making crypto fun again.

Related: Doctor Who to Enter the Cryptoverse as BBC Plans Trading Card Game on Ethereum Blockchain

They’re about making money.

Yam Finance launched Tuesday. By the following day, YAM shot upwards of $160 per token and had some $700 million in no-loss collateral obligations under contract (aka yield farming). Early Thursday morning, YAM entered Github Valhalla when a bug locked the project’s governance and $750,000 treasury. The token’s market cap swiftly lost $60 million in 35 minutes. 

Read more: DeFi Meme Coin YAM Succumbs to Fatal ‘Rebase’ Bug, Makes Plans for ‘YAM 2.0’

Playing the game

From first heartbeat to last breath in less than 48 hours. But those are the rules of DeFi’s newest toy, “minimally viable monetary experiments,” as Yam Finance dubbed itself. 

Related: Market Wrap: Stuck at $11.5K, Bitcoin Surpasses 25K Locked in DeFi

“The longer it takes you to do due diligence in this cycle, the lower your alpha,” McKie told CoinDesk in a phone interview. “If you are clued in to play the game, play it. If not, sit out to the next one.”

McKie was an early liquidity provider for Base.Money, another DeFi MMO game (as he likened it to). The project’s anonymous “Ghouls” founding team welcomed its users warmly via Tor:

WE ARE LIVE
GET THE FUCK IN YOU DEGENERATES

Play by the rules (even if you don’t know them)

Does the project have a governance structure? Where can I stake collateral to farm? What pool has the best returns? 

These are the questions DeFi “degenerates” (or “degens”) shoot back and forth ad nauseam in various community Telegram and Discord channels.

For YAM, the central rule was “Know thy rebase,” the algorithmic supply dump issued every 12 hours to push the token’s value back toward one dollar. The token was bid up to as high as $167, according to CoinGecko. Traders rushed to take profits before the rebase. After, they pumped the token’s value back up.

Read more: Deposits in ‘Monetary Experiment’ Meme Token YAM Break $460M

Based Money isn’t much different, minus a few rule changes: Farm the BASED token, push the token price up and storm out the door before the algorithm changes the rules.

“The BASED Protocol is a DeFi game of chicken designed to shake out weak hands and yield the highest gains for those who understand the rules,” the website reads.

BASED is trading hands at $128 at time of writing, according to CoinCecko.

DeFi MMO is all possible because of Ethereum’s composable nature, said Aave CEO and founder Stani Kulechov said in a recent Chainlink blog. Often analogized to Lego bricks, Ethereum applications can be snapped together to create novel financial projects.

Yield farming makes liquidity just another plastic brick in the box, he said.

Read more: What Is Yield Farming? The Rocket Fuel of DeFi, Explained

“If that product is good, it will get network effects quickly since liquidity moves in an interoperable fashion as well,” Kulechov said.

DeFi composability

Yet, composability does not translate to product safety, OpenZeppelin security researcher Austin Williams told CoinDesk in an email. Just ask YAM investors.

“It is important to understand, however, that just because a project is composed of code that comes from several other audited projects does not mean that the new amalgamation is safe,” Williams said.

That said, yield farming stands as a better alternative to initial coin offerings (ICOs). Yield farmers are rewarded with a project’s native token for lending liquidity to its market. In other words, you don’t get burnt for swapping fiat for an unproven token. 

Read more: Compound’s Approach to DeFi Governance Starts With Giving Away COMP Tokens

It’s not like these projects have not warned users beforehand about the risks, either. Both Yam Finance and Base Money publicly broadcasted that the code banks were unaudited.

In it for the memes (and the money)

This doesn’t make it a smart play, or even a good look, for an industry egg-faced with scams. Those who bought YAM or BASED tokens at retail prices paid for every farmer’s ticket into the arena, crypto blogger Lefteris Karapetsas said Thursday.

“The bad side of farming is the ‘DeFi Chad’ or ‘Defi Degen.’ The kind of meme-driven farmer who jumps from protocol to protocol without any thought on contract safety, chasing the biggest yield, dumping their tokens to the new guys and then moving on,” he wrote.

But it is lucrative for interest-hungry farmers. It’s also really fun.

Read more: DeFi Traders Are Gaming Ethereum for Higher Profits, Researchers Say

“A community that didn’t exist 30 hours ago, through the power of memes and financial incentive alignment, is about to get a higher voter turnout than the U.S. presidential election usually does,” Yam Finance Telegram owner Eric Meltzer said early Thursday morning, referring to a governance vote to save the project.

A shower of “when rebase?” memes and emojis greeted Meltzer’s comment. Within hours the whole project was all but bricked. But don’t worry, a YAM 2.0 is already in the works.

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The U.S. Federal Reserve is actively investigating distributed ledger technologies and how they might be used for digitizing the dollar.

Federal Reserve Board Governor Lael Brainard said the U.S. central bank has been testing DLT over the past several years to study what a digital currency might do to the existing payments ecosystem, monetary policy, financial stability and the banking sector.

“With these important issues in mind, the Federal Reserve is active in conducting research and experimentation related to distributed ledger technologies and the potential use cases for digital currencies,” Brainard said Thursday at the Federal Reserve Bank of San Francisco’s Innovation Office Hours.

Related: 4 Myths About CBDCs Debunked

Read more: Senate Banking Committee Remains Open to Idea of Digital Dollar in Tuesday’s Hearing

Brainard cited the ongoing COVID-19 pandemic as one issue that reinforced the need for “immediate and trusted access to funds,” noting that recipients of emergency stimulus funds spent them quickly, indicating they urgently needed access.

“The COVID-19 crisis is a dramatic reminder of the importance of a resilient and trusted payments infrastructure that is accessible to all Americans,” she said. “It was notable that after a sharp reduction in spending early in the COVID-19 crisis, many households increased their spending starting on the day they received emergency relief payments.”

The idea of a digital dollar as a tool to distribute emergency stimulus funds is not new. Congress has been kicking the idea around since at least March. However, no concrete public efforts have been made to create a blockchain-based central bank digital currency in the U.S.

Experimentation

Related: Fed Reserve Analysts Say Common Digital Currency Distinction ‘Problematic’

U.S. lawmakers have asked Federal Reserve Chairman Jerome Powell about the potential benefits to a digital dollar in the past. The regulator said last November that the central bank is “carefully analyzing” the potential benefits as well as the costs.

At the time, Powell said the Fed was not actively developing a digital dollar, that it might not offer the same benefits to U.S. consumers that other nations’ central bank digital currencies would offer their citizens and that there are questions about privacy and consumer protection.

Brainard echoed these questions in her speech Thursday, but her remarks indicate the Fed is further along in its experimentation than has previously been confirmed.

Read more: US Fed Chair Says Private Entities Should Not Help Design Central Bank Digital Currencies

“To enhance the Federal Reserve’s understanding of digital currencies, the Federal Reserve Bank of Boston is collaborating with researchers at the Massachusetts Institute of Technology in a multiyear effort to build and test a hypothetical digital currency oriented to central bank uses,” Brainard said.

The code from these experiments will be published under an open-source license for the general public to experiment with it.

International efforts

Brainard said the existence of other CBDCs and private cryptocurrencies, like bitcoin and libra, underscore the need for the U.S. to evaluate cryptocurrencies. 

“Digital currencies, including central bank digital currencies (CBDCs), present opportunities but also risks associated with privacy, illicit activity, and financial stability,” she said. “This prospect has intensified calls for CBDCs to maintain the sovereign currency as the anchor of the nation’s payment systems.”

She also singled out one country in particular, noting “China has moved ahead rapidly on its version of a CBDC.”

The Fed needs to “remain on the frontier of research and policy development” given the dollar’s role in the world, she said. 

Read more: Senate Hearing Sees Digital Dollar as a Tool for Economic Supremacy

Her views have been echoed in the past by former Commodity Futures Trading Commission (CFTC) Chairman Chris Giancarlo, who is now a director with the Digital Dollar Project, which has called for tokenizing the dollar. Giancarlo has appeared before Congress three times this summer to advocate this approach.

Like Brainard, Giancarlo has said a digital dollar would benefit the U.S. both in terms of quickly distributing or transferring funds when needed, as well as continue to maintain the dollar’s dominance in the global economy.

Many questions remain before the U.S. can even consider a CBDC, Brainard said Thursday. They include whether a CBDC issued by the Fed would be legal tender under the law.

“A significant policy process would be required to consider the issuance of a CBDC, along with extensive deliberations and engagement with other parts of the federal government and a broad set of other stakeholders,” she said. 

“… The Federal Reserve has not made a decision whether to undertake such a significant policy process, as we are taking the time and effort to understand the significant implications of digital currencies and CBDCs around the globe.”

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Band Protocol (BAND) started trading on Coinbase on Thursday less than two weeks after first appearing on the exchange’s exploratory list.

• BAND is the native token of the Band Protocol oracle platform, a Sequoia Capital- and Binance-financed project building links between real-world data and smart contracts.
• The token hit new 24-hour highs and was trading around $15.17 less than an hour after news of the listing broke, according to CoinGecko.
• BAND has surged around 180% since Coinbase announced on Aug. 5 that it would list the token on Coinbase Pro.
• Trading is available across the U.S. with the exception of New York State, according to Coinbase.

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Crypto custodian Anchorage will provide direct custodial support for two Tokensoft-issued security tokens under a new partnership announced Thursday.

• Investors in Arca’s ArCoin U.S. Treasury Fund token and the upcoming INX token from digital asset exchange INX Limited can custody their tokens directly with Anchorage.
• Both tokens use the ERC-1404 standard that Tokensoft developed for SEC registered assets on the Ethereum blockchain.
• The tokens will now flow through Tokensoft’s affiliated transfer agent directly into Anchorage, a qualified custodian, according to Tokensoft.
• As reported by Forbes, the direct integration hopes to replicate Wall Street’s seamless purchase-to-custody experience for the blockchain securities space.

Read more: 605 Days Later: How ArCoins Got the SEC Go-Ahead as an Ethereum-Traded Treasuries Fund

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