Bitcoin (BTC) is down over 4% in the past 24 hours, falling below $60K. However, a retest of $74,000 in the coming weeks is possible, at least based on a maturing Wyckoff reaccumulation pattern and increasing odds of three rate cuts by 2024’s end.

Bitcoin is testing key spring support

The Wyckoff reaccumulation pattern is a technical setup that identifies phases of consolidation and accumulation after a prolonged uptrend.

In this pattern, the price typically goes through nine critical phases, namely Preliminary Supply (PSY), Buying Climax (BC), Automatic Reaction (AR), Secondary Test (ST), Spring, Test, Last Point of Support (LPS) and finally, the Sign of Strength (SOS).

Wyckoff re-accumulation pattern illustration

As of Aug. 4, Bitcoin had entered the "Test" phase of its Wyckoff re-accumulation pattern.

In this phase, the cryptocurrency is testing its Spring phase low—at around $53,400—as support to confirm bullish continuation toward its new Last Point of Support (LPS) at around $70,000, as shown in the chart shared by independent analyst Moustache on his X channel.

Bitcoin's Wyckoff re-accumulation pattern illustration. Source: Moustache

According to the Wyckoff re-accumulation rule, a new uptrend cycle will begin when Bitcoin enters the ninth and final stage, called the Sign of Strength (SOS), after retesting the Wyckoff pattern's peak level of around $74,000.

This final stage signals strong upward movement and market strength, indicating a confirmed uptrend.

Three rate cuts possible in 2024 amid recession risks

Bitcoin’s price has slid 10% alongside the US stock market since Aug. 1, when the US reported unemployment claims hitting an almost one-year high and declining manufacturing activity. Bitcoin exchange-traded funds (ETF) have witnessed circa $200 million in withdrawals in the same period.

BTC/USD versus Nasdaq 100, S&P 500, and Dow Jones daily performance chart. Source: TradingView

Interestingly, BTC's decline appears despite increasing odds of three rate cuts in 2024 instead of one, marking a significant departure from the trend observed over the past year, where crypto markets often welcomed weak economic data.

Related: Bitcoin whale volume from exchanges hits 9-year high as analysts call BTC price bottom

This decline is likely driven by rising recession alerts following the latest US jobs report.

Historically, Bitcoin has struggled during periods of heightened recession fears. For example, during the COVID-19 market crash in March 2020, Bitcoin fell in tandem with the US stock market. Bitcoin’s price began to rebound when the Federal Reserve implemented quantitative easing and rate cuts.

Source: X

Numerous crypto analysts, including Michael van de Poppe, see a similar price trend in the coming weeks. In other words, Bitcoin will face recessionary risks but rebound after the Fed implements its rate cuts in September.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

A Galaxy Research report has suggested that most Bitcoin layer-2 scaling networks, particularly “rollups,” may not be sustainable in the long term despite their popularity as a promising method to keep Bitcoin payments cheap, fast, and decentralized. 

In the report published Friday, Galaxy analyst Gabe Parker highlighted the cost of posting data as a fundamental challenge Bitcoin rollups face that post data to the base layer.

Challenges facing Bitcoin rollups

Parker explained that for Bitcoin rollups to thrive, they must generate substantial revenue from transaction fees on their own networks. This revenue must come from many users willing to pay for transactions on the layer-2 networks.

Rollups work by taking a large number of transactions, compressing them into a single batch, and then posting a summary of this batch back to the main blockchain.

Source: AlexeiZamyatin

Bitcoin rollups utilize the blockchain as a “data availability layer,” posting sufficient data to allow any ordinary Bitcoin node to reconstruct the most recent state of the rollup network at any time.

However, Bitcoin blocks have a storage capacity limit of 4MB, and posting data to Bitcoin demands significant data usage. Each data posting transaction can consume up to 400KB (0.4MB) of block space, effectively occupying 10% of an entire block.

Survival of the fittest

With multiple rollups expected to post their data every 6 to 8 blocks, base-layer fees could rise significantly, potentially pricing out smaller transactions. To survive, rollups must outdo one another in generating fee revenue, as this will determine their priority in the blocks.

Related: Everything Bitcoin: L2s see wave of adoption, but security needs to catch up

Galaxy Research estimated that in a low-fee environment, where ordinary transactions cost ten sat/VB (satoshis per vByte)- a unit of block space data), rollups would incur monthly expenses of $460,000 to maintain Bitcoin’s security. In high-fee environments of 50 sat/VB, monthly costs could soar to $2.3 million.

Alexei Zamayatin, co-founder of “Build on Bitcoin” (BOB), a hybrid rollup intended to connect Ethereum and Bitcoin, believes Bitcoin rollups can be as cost-effective as Ethereum rollups but argues against using Bitcoin’s main chain for data availability.

Instead, Zamayatin recommends using Celestia or a merge-mined Bitcoin sidechain, which, while cheaper, sacrifices some of Bitcoin’s complete decentralization and security.

Zamayatin responded to the Galaxy report on Twitter, stating, “No one will use Bitcoin L2s if they are 100x more expensive than Ethereum L2s, just because ‘it is on Bitcoin.’ Good news: They won’t be more expensive.”

Magazine: ‘Elon Musk at Bitcoin 2024’ scam, Lazarus Group hacks, MOG phishing: Crypto-Sec

Dogecoin, the popular meme cryptocurrency, is about to receive a significant security update with the release of Dogecoin Core 1.14.8. This latest update focuses on enhancing the reproducibility of the compilation process, a crucial step toward bolstering the network’s security and reliability.

A junior developer from the Dogecoin team announced on the X social platform that Dogecoin Core 1.14.8 has passed the critical “can multiple developers reliably reproduce the exact output from the compilation process” test.

Risks of unaudited code

This update is a significant indicator that the release is imminent. The Dogecoin Core client is essential for several functions, including participating in the network, validating transactions, and relaying them. It also has the capacity to hold keys for users in the event of a transaction.

Source: Chromatic X

The junior developer used an analogy to highlight the necessity of ensuring the Core client’s reproducibility. He emphasized that users must place their trust in someone without the ability to audit every line of code used to compile the Core client.

Related: Arbitrum-based DuelNow receives $11M funding as Web3 betting heats up

However, this reliance poses a risk, as an untrustworthy individual could potentially introduce an exploit into the software. Such vulnerabilities could expose users’ private keys or identities, leading to severe consequences like network congestion or even a complete network takeover.

Enhancing network security

To address these concerns, the latest update on Dogecoin Core is committed to ensuring that users do not have to trust anyone blindly. By making it possible for multiple developers to reliably reproduce the same output when they input the same code and dependent libraries, the team aims to create a transparent and secure development process.

This approach strengthens the network’s security and enhances transparency and trust within the community. Users can have greater confidence that their software is secure and has not been tampered with.

On Aug. 2, Dogecoin (DOGE), the leading meme cryptocurrency by market value, experienced a slight price drop of 2.5%, settling at $0.1131 with a market capitalization of $16.43 billion. Interestingly, DOGE dominates the memecoin market, holding approximately 62% of the sector’s total market share.

According to CoinMarketCap, the combined market value of memecoins has declined over the past ten days, decreasing by 21.5% from $54.70 billion on July 22 to $42.91 billion on Aug. 2.

Magazine: THORChain founder and his plan to ‘vampire attack’ all of DeFi

Australian prosecutors are reportedly pushing jail time for a Crypto.com user who accidentally received nearly $7 million USD and spent most of it before the exchange discovered the internal error made three years ago.

In May 2021, Crypto.com sent $6.86 million (10.47 million AUD) to Australian couple Thevamanogari Manivel and Jatinder Singh instead of a $100 refund after an employee allegedly typed an account number into the payment section of an Excel spreadsheet.

However, the exchange detected that the bank account did not match the exchange account. Therefore, a refund was issued, but instead of refunding the 100 AU$ that the couple tried to put in, the exchange mistakenly sent 10.5 million AU$ to Manivel’s bank account.

By the time the exchange found the error in an internal audit in December 2021, just seven months later, Singh had bought multiple homes and gifted a friend $1 million AUD. He claimed he thought he had won "an online raffle."

Australian prosecutor argues jail sentence is necessary

In the latest court hearing on Aug. 2, roughly three years after the incident, Australian prosecutor Campbell Thomson argued that the amount of money involved, it was “out of range” to be considered a crime of opportunity.stated that a jail sentence was necessary for Singh, according to an Aug. 2 report.

“It may not be that you send him to jail for very long at all after taking into account his presentence detention,” he said.

Meanwhile, Singh's lawyer, Martin Kozlowski, argued that Singh didn't fully grasp the seriousness of the unusual situation, which would have been a challenge for anyone.

“It must be taken into account the funds here came from a multinational that didn’t even know the funds were gone until an audit sometime later,” Kozlowski said.

“Nobody knows how they would respond if faced by the same situation," he added.

Previously raised concerns about Singh being a flight risk

In March 2023, prosecutors argued that Singh was financially driven to flee the country since only $4.9 million had been recovered, with part of it already sent abroad.

Singh is scheduled to be sentenced next month. In September 2023, his partner, Manivel, was given a roughly seven-month prison sentence (time already served) and placed on an 18-month community corrections order after pleading guilty to recklessly handling the proceeds of crime.

Related: Darknet market crypto crimes on the rise in 2023, $1.7B revenue — Chainalysis

This follows a reported increase in crypto crime in Australia recently.

On July 15, the Australian Transaction Reports and Analysis Centre (AUSTRAC) Money Laundering National Risk Assessment reported increased criminal use of crypto and related services in its latest report on money laundering.

AUSTRAC anticipated a spike in the criminal use of cryptocu due to greater anonymity and faster speed of transactions.

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The recent shutdown of ZKX has sent ripples through the cryptocurrency community, prompting investor and market maker Amber Group to share its perspective and crucial information to promote transparency and support the community. 

In a post on the X social platform, Amber Group disclosed that the announcement on July 30 that ZKX would cease operations shocked Amber Group as it did to the broader crypto community.

Supporting ZKX’s market operations

The firm noted that it has been closely involved with ZKX as a market maker, facilitating liquidity during the token generation event (TGE) held on June 19.

To ensure smooth market operations, Amber Group received a 2 million ZKX tokens loan under a standard loan agreement with no additional fees. According to the investor, the strategy was to maintain consistent liquidity and a market-neutral position, which is crucial for the long-term success of projects and their communities.

Source: HashKey Capital

Despite the lack of organic buying interest at launch, Amber Group continued to buy ZKX tokens to uphold liquidity, even as prices declined. However, on June 24, the ZKX team requested the return of 1 million ZKX tokens to reduce circulation and bolster community confidence. Amber Group agreed, reducing their token loan to 1 million tokens.

Related: Starknet launches $25M token incentive for top projects

Amber Group has accumulated 2 million ZKX tokens from the open market due to their liquidity provision efforts, bringing their total holdings to 3 million ZKX tokens. This includes the 1 million token loan and 2 million net accumulated tokens.

Investors vent frustration

Other investors, including Hashkey Capital, have expressed their disappointment and frustration with the ZKX Protocol, stating that they, like other investors, did not receive sufficient transparency and accountability from the protocol regarding its financial information and operational plans and decisions.

According to Hashkey, ZKX Protocol’s failure to provide transparent and timely disclosures about its operations and management eroded trust and confidence in the project. Furthermore, ZKX’s unresponsive communication style was disappointing, and founder Eduard Jubany Tur’s handling of the situation was deplorable.

On July 31, the ZKX Protocol, a social derivatives trading platform operating on the Ethereum-based Starknet layer-2 network, ceased operations. Its founder cited a lack of feasible economic prospects for the project’s continued existence.

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A specialized task force using artificial intelligence is set to be developed by Argentina to identify and deter future crimes within the nation.

The Ministry of Security of Argentina has announced the creation of the Applied Artificial Intelligence for Security Unit (UIAAS), led by the director of cybercrime and cyber affairs, along with members from the Argentine Federal Police and security forces.

One of the main tasks of the group will be to “use machine learning algorithms to analyze historical crime data to predict future crimes and help prevent them,” according to a recent statement by the Ministry of Security of Argentina.

Identifying unusual patterns in computer networks

The crimes of interest for the UIAAS range widely. A major focus is identifying potential cyber threats by detecting "unusual patterns in computer networks," including malware, phishing, and other types of cyberattacks.

It will also handle more dangerous tasks, such as bomb disposal, and attempt to improve the speed of communication between the Police Force and relevantsecurity teams.

Monitoring social media activity was also mentioned as a method to detect any signs of communication about potential future crimes.

“Analyze social media activities to detect potential threats, identify criminal group movements, or foresee disturbances,” it stated.

Not everyone is convinced

Some have taken to social media to argue that it may not be beneficial in the long run.

Well-known American software engineer, Grady Booch, claimed it “will not end well” to his 165,500 X followers in an Aug. 2 post.

"Argentina is using AI to fight crime, but at what cost to privacy?" computer software engineer David Arnal commented.

“Once again, where are the Milei supporters on this one?” author Derrick Broze added.

It follows recent news that the United States government is investigating OpenAI, the creator of ChatGPT, to gain more insight into its safety standards.

Senate Democrats and one independent lawmaker have sent a letter to OpenAI CEO Sam Altman regarding the company’s safety standards and employment practices toward whistleblowers.

Related: Nvidia delays next gen AI chip as investors issue ‘bubble’ warning

The most significant portion of the letter, first obtained by The Washington Post, was item 9, which read, “Will OpenAI commit to making its next foundation model available to the U.S. Government agencies for pre-deployment testing, review, analysis, and assessment?”

Meanwhile, the United Nations General Assembly recently endorsed a resolution around AI.

The resolution — initiated by the United States and backed by 123 countries, including China — was adopted on March 2, encouraging countries to safeguard human rights, protect personal data, and monitor AI for risks.

Magazine: Criminal at Bitcoin 2024, BTC Strategic Reserve Bill, and more: Hodler’s Digest, July 28 – Aug. 3

Ether is holding tight to a critical support level and is at a tipping point that could lead to a decline below $2,800 if it fails to hold, according to crypto traders.

“Ethereum is holding onto the crucial area of support,” MN Trading founder Michael van de Poppe wrote in an Aug. 3 X post. Van de Poppe further explained that if it fails to maintain the level, it will impact Ether around a further 4%, and push Bitcoin (BTC) — which is trading at $60,717 — further down into an uncertain range for traders.

“If this is lost, Bitcoin is likely going to test $60K and Ethereum will test <$2,800 as the final big correction,” Van de Poppe claimed.

Michael van de Poppe points to a possible further decline in Ether's price. Source: Michael van de Popp

Other traders also suggested that Ether’s price might drop below $2,800 before any recovery begins.

“The only other level which seems price could go before a full blown reversal would be around $2.7k,” pseudonymous crypto trader Crypto Wealth wrote.

“At this point, the price should sweep the 2800 lows and test the weekly demand, $2500-$2700,” pseudonymous crypto trader Poseidon added.

Ether (ETH) is currently trading at $2,885 at the time of publication, down 11.09% since July 28, according to CoinMarketCap data.

Ether's price is down 11.09% since July 28. Source: CoinMarketCap

A slight decline to $2,800 will wipe out $259.46 million in long positions, according to CoinGlass data.

Given Ether's current volatile range, van de Poppe pointed out that there's also potential for a rebound in the near term.

“If that doesn't happen and we rotate back up from here, it's party time,” he stated.

Related: 3 Ethereum price metrics point to further downside in ETH

This comes after a week of spot Ethereum ETFs oscillating between inflows and outflows. The overall net amount from July 29 to Aug. 2 was outflows totaling $169.4 million, according to Farside data.

On Aug. 1, Katalin Tischhauser, ead of Investment Research at Sygnum Bank told Cointelegraph that Spot Ether exchange-traded funds could amass as much as $10 billion in assets under management within their first year of trading.

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This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

Top Five Stories of the Week

Sen. Lummis introduces Bitcoin Strategic Reserve bill in Senate

On July 31, Senator Cynthia Lummis officially introduced the Bitcoin Strategic Reserve bill, which would direct the United States government to start a reserve fund for the scarce decentralized asset. More specifically, the bill would establish a decentralized network of secure Bitcoin vaults under the control of the United States Treasury. 

The bill also directs lawmakers and bureaucrats to enact strict cybersecurity parameters and other physical security measures to ensure that Bitcoin funds are not stolen. Additionally, the bill laid out a goal of accumulating 1 million Bitcoin over time, or roughly 5% of Bitcoins total supply, using existing U.S. Treasury funds to acquire the Bitcoin in amounts that mirror the U.S. Treasurys gold allocation.

Lummis bill also reaffirmed the right to self-custody in the United States. It seeks to protect this right, which has come under fire from certain U.S. lawmakers.

Bitfinex hacker Heather Morgan spotted at Bitcoin Conference 2024

Heather Morgan a self-styled social engineer and flamboyant rapper also known by her alter ego Razzlekhan made headlines after being arrested for and subsequently pleading guilty to one of the most audacious cyber heists in history: the 2016 Bitfinex hack resulting in the theft of 120,000 Bitcoin, worth $4.5 billion at the time of her arrest.

Contrary to popular belief that she was behind bars, Morgan reportedly appeared at the Bitcoin 2024 conference in Nashville, sparking curiosity and controversy among attendees. 

When Morgan pleaded guilty on Aug. 3, 2023, she knew she could face up to five years in prison and receive a fine of $250,000. Since then, shes been awaiting sentencing, scheduled for Nov. 8, 2024.

Jameson Lopp, a Bitcoin developer and co-founder of Bitcoin custody firm Casa, found her presence extremely suspicious. He advised Bitcoin event organizers to regard her as a threat actor and deny her entry.

Lopps concerns highlight the broader unease within the crypto community regarding Morgans intentions and the potential risks she might pose at these gatherings. He told Cointelegraph that he believes there could be two explanations for her attendance at these events.

A charitable explanation would be that shes seeking consulting gigs in order to pay the $250,000 fine she owes to the government, according to Lopp. She has reportedly introduced herself as a Web3 adviser at Bitcoin conferences.

However, Lopp said an adversarial explanation would be that shes seeking to reduce her sentence by collecting intel on behalf of the government.

4 suspects forced a Bitcoiner to transfer BTC before killing him, police say

Police have arrested four suspects for allegedly kidnapping and murdering an unidentified 29-year-old foreign national Bitcoiner in Kyiv, Ukraine, after stealing $170,000 worth of Bitcoin from him.

The four suspects all male and aged between 24 and 29 reportedly premeditated the attack, launching their assault around midnight on July 29, Kyiv Police said. Residents contacted police after hearing screams and several people beating and forcing a man into a car.

Police said the victim was taken to an abandoned building where he was forced to transfer approximately 7 million Ukrainian hryvnias worth of Bitcoin (around 2.55 BTC), before the assailants strangled the man to death and buried his body in a forest.

Kyiv Police also allege the four men changed the appearance and number plates of the car used to try to conceal the crime. The suspects then converted the Bitcoin into stacks of United States dollars and euros before being found and detained by Kyiv Police.

Trumps Bitcoin sneakers are already on eBay for $2,500

Listings for pairs of Donald Trumps limited-edition orange Bitcoin-themed sneakers have already made their way onto eBay, with scalpers hoping to sell their spot in the pre-order queue for as much as $2,500. 

At the time of writing, there were 12 listings on eBay for the Bitcoin orange-colored high-tops. Prices start as low as $700 via a live auction but range as high as $2,500 with a or best offer condition. One offer jokingly set a price of $69,999.

However, theres no telling if the sellers will keep their word or if the listings are legitimate.

Most of the listings promise to ship the footwear to their buyer once they receive it, which is expected between September and November. Most of the sellers appear to have high ratings, though more than one has been accused of being a scam in the buyer feedback section.

Trumps Bitcoin-themed footwear went live for pre-order on the official Trump Sneakers website on July 31, with a limited edition run of 1,000 for the orange high-top shoes. They sold out within three hours of launch.

Notably, the website said five pairs of the limited edition shoes would be randomly signed by Trump meaning that Trump sneakerheads would have a 1 in 200 chance of receiving a signed pair.

Judge grants ex-FTX execs request to postpone reporting to prison

A federal judge has granted a motion filed by lawyers representing former FTX Digital Markets co-CEO Ryan Salame to delay reporting to prison until Oct. 13.

In a July 30 filing by the United States District Court for the Southern District of New York, Judge Lewis Kaplan approved a motion allowing Salame to push back his self-surrender date by 45 days as part of his sentence of 7.5 years in prison. Salames legal team requested the delay due to medical complications from a dog biting the former FTX executives face on June 29 while he was visiting a friends home.

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The July 26 motion by Salames legal team redacted medical information related to his injuries but claimed that a German Shepherd mauled him and he would require treatment and surgery before reporting to prison. He was initially going to report to prison on Aug. 29, roughly three months after being sentenced.

The former FTX executive returned to the social media platform X after roughly two years following his May sentencing hearing. On the day of the alleged dog attack, he suggested that a surgeon who didnt hold his political views would be more likely to intentionally harm him while treating the wound.

Winners and Losers

At the end of the week, Bitcoin (BTC) is at $62,083, Ether (ETH) at $3,038 and XRP at $0.56. The total market cap is at $2.21 trillion, according to CoinMarketCap.

Among the biggest 100 cryptocurrencies, the top three altcoin gainers of the week are AAVE (AAVE) at 14.02%, Bitcoin Cash (BCH) at 4.14% and Kaspa (KAS) at 2.45%.

The top three altcoin losers of the week are dogwifhat (WIF) at 35.25%, Render (RENDER) at 27.10% and Bittensor (TAO) at 24.54%.

For more info on crypto prices, make sure to read Cointelegraphs market analysis.

The general premise is that if criminals are less aware of you, they are less likely to target you.

Jameson Lopp, co-founder of Casa

There is no reason to think SEC has decided SOL is a non-security,

Jake Chervinsky, chief legal officer at Variant

As families across Wyoming struggle to keep up with soaring inflation rates and our national debt reaches new and unprecedented heights, it is time for us to take bold steps to create a brighter future for generations to come by creating a strategic Bitcoin reserve.

Cynthia Lummis, United States senator

Politicians are embracing crypto because Americans are embracing crypto.

Matt Hougan, chief investment officer at Bitwise Asset Management

Tone deaf anyone??? Moving Silk Road BTC two days after Trumps pledge to not move them is just dumb!!!!

Mike Novogratz, CEO of Galaxy Digital

The SECs approach threatens the livelihoods of artists and creators that are simply experimenting with a novel, fast-growing technology or have chosen it as their preferred medium.

David L. Patron, attorney at Phelps Dunbar

Prediction of the Week

Ethereum ETFs could reach $10B AUM in first year: Sygnum Bank

Spot Ether exchange-traded funds could amass as much as $10 billion in assets under management within their first year of trading.

Katalin Tischhauser, head of investment research at Sygnum Bank and a former executive at Goldman Sachs, told Cointelegraph in an interview that the projections are based on her forecast for spot Bitcoin ETFs. She predicted that Bitcoin ETF inflows would be in the $30 billion to $50 billion range for the first 12 months of trading, and Ethereum products would follow.

Ethereums lesser name recognition is likely to mean slower adoption, she said, before adding:

With Ethereums market capitalization a third of Bitcoins, we expect the relative inflows to be in the 15-35% range versus Bitcoin, with a resulting forecast of $5 to $10 billion in the first year.

The researcher said that there were significant advantages to ETFs for traditional investors because they are mostly not set up to trade, settle, and risk-manage direct crypto investments:

A familiar regulated product such as ETFs makes Ether easily accessible to investors who are interested in simple investment exposure.

FUD of the Week

SEC likely still believes SOL is a security, say crypto execs

The United States Securities and Exchange Commission hasnt necessarily let Solana off the hook as a security despite retracting its request for a court to decide on the matter as part of its Binance lawsuit on July 30.

There is no reason to think SEC has decided SOL is a non-security, said Jake Chervinsky, chief legal officer at crypto-focused venture capital firm Variant Fund, in a July 30 post on X.

Chervinskys post refers to the latest response from the SEC, seeking to amend its complaint regarding the Third Party Crypto Asset Securities, essentially telling the court it is no longer asking to determine whether the tokens listed in the lawsuit are securities or not.

While Chervinsky didnt expand on what that litigation tactic may be, he highlighted that the SEC still refers to the same tokens as securities in other crypto exchange lawsuits, including its one with Coinbase.

In separate posts, Miles Jennings, general counsel and head of decentralization at a16z Crypto, and Justin Slaughter, policy director at Paradigm, appeared to agree.

Slaughter argued that many are overreading this filing and that it doesnt mean the SEC has decided that Solana and other tokens are not securities.

Jennings explained that Judge Amy Berman Jackson had set such a high bar to establish the Howey test in the Binance case that it wasnt worth the SECs time and effort to prove these tokens were securities.

SEC Charges BitClout founder Nader Al-Naji with fraud

On July 30, the United States Securities and Exchange Commission (SEC), alongside the U.S. Attorneys Office for the Southern District of New York, announced charges against BitClout founder Nader Al-Naji.

The SECs complaint alleged the BitClout founder sold $257 million in unregistered securities through BitClouts native token, BTCLT, and defrauded investors by misusing a portion of those funds. The SEC also named Decentralized Social (DeSo), a newer project from Al-Naji, in the complaint and a corresponding press release.

More specifically, the complaint accused Al-Naji of spending $7 million in customer funds on luxury items like leasing a Beverly Hills mansion and giving generous cash gifts to family members despite promising investors that funds would not be used as compensation for any BitClout team members.

The SEC complaint claimed that Al-Naji also mischaracterized the core inner workings of the BitClout project. According to the securities regulator, the BitClout founder misled investors and legal firms by claiming the project was decentralized, with no governing company controlling It, yet was running the project behind the scenes.

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Crypto sleuth investigates suspect in Sydney Sweeneys hack

A few weeks after American actress Sydney Sweeney suffered a major cryptocurrency-related hack on X, some new details on the attack and the alleged hacker have surfaced.

ZachXBT, a pseudonymous, independent on-chain sleuth, took to X on July 30 to post his investigation into the recent hack of Sydney Sweeneys X account and the alleged connection of convicted hacker Gurvinder Bhangu to the incident.

The X account of the actress was hacked on July 2, 2024, with the attacker promoting a Solana-based token, SWEENEY, in a pump-and-dump scheme.

According to findings by ZachXBT, Bhangu was one of the people behind the hack.

Bhangu, also referred to as Gurv in the post by ZachXBT, is described as a convicted hacker who has served time in the United Kingdom for hacking into Instagram accounts and blackmailing users.

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Ignore the hopium. Staking isn’t coming to spot Ethereum (ETH) exchange-traded funds (ETFs) anytime soon — and probably not until United States regulators take a softer stance on crypto. That leaves retail investors in the United States with few options. For now, staking on a regulated spot exchange — such as Coinbase or Gemini — is the best choice. 

Spot ETH ETFs — which finally listed on US exchanges in July — are supposed to set the gold standard for ETH investing. In many ways they did. High liquidity, low fees, robust investor protections, and easy accounting make a strong case for funds such as Grayscale Ethereum Mini Trust (ETH) and Franklin Templeton’s Franklin Ethereum ETF (EZET).

Unfortunately, without staking, investors seeking to maximize returns must look elsewhere.

Don’t leave Ether on the table

Staking involves locking up ETH as collateral with a validator on Ethereum’s Beacon chain. Stakers earn ETH payouts from network fees and other rewards but risk “slashing” — or losing ETH collateral — if the validator misbehaves. That risk is negligible on reputable staking platforms. Staking currently yields around 3.2% APR — or slightly higher with services such as Flashbots.

Total staked Ether and staking APR as of Aug. 3, 2024. Source: Ethereum.org

Investing in ETH without staking is wasteful — similar to throwing away dividends from stocks. That’s why so many issuers — including Fidelity, 21Shares, and Franklin Templeton — urged regulators to permit staking in ETH ETFs. Those requests were shot down in March. Now, of the eight ETH ETFs trading in the US, not a single one pays staking rewards.

Related: Ethereum ETFs are coming — Here’s what you need to know

Regulators had reason to be hesitant. Spot ETH ETFs aren’t like typical index funds. They rely on a less common structure — known as a Grantor Trust — intended mainly for passive commodity funds. Staking, which arguably requires active management, may be off-limits.

Another concern is liquidity. Timelines vary, but withdrawing staked ETH often takes days. That would make promptly redeeming shares — a core feature of ETFs — almost impossible. Finding the right solution isn’t easy, and depends heavily on regulators’ willingness to cooperate. Don’t expect progress until after the November elections.

Limited Choices

In the meantime, choices are limited. One option is aping into one of the dozens of decentralized finance (DeFi) protocols dealing in liquid staking derivatives (LSDs). Despite the apparent diversity, they all basically model themselves after Lido Finance, the market leader with upwards of $30 billion in total value locked (TVL). Lido users exchange spot ETH for stETH, a tokenized claim on Lido’s staking pool.

ETH price and quantity in circulation from January 2020 through Aug. 3, 2024. Source: Glassnode

The DeFi ecosystem is a playground for LSDs, with permissionless options ranging from leveraged trading to restaking and more. The problem is that LSDs compound risks for stakers and are largely unregulated, at least in the US. That leaves holders with little recourse if something goes wrong. 

Lido’s new institutional platform — which combines composable stETH with infrastructure from Fireblocks and Taurus — might stand apart, but it’s not for everyday investors.

Regulated spot crypto exchanges, including Coinbase and Gemini, are a safer approach. They lack the robust investor protections offered by ETFs but are still subject to meaningful oversight. Coinbase and Gemini are both regulated Virtual Currency Businesses under the New York State Department of Financial Services (NYDFS).

Related: Ethereum's future rests on 10,000 blockchains

They also adhere to best practices in cybersecurity — including insuring accounts against certain exploits — and stake ETH with professionally-run validators. In 2022, Coinbase added Flashbots' MEV-Boost, open-source middleware that helps validators order transactions to maximize rewards. Coinbase says no user has ever lost crypto by staking on its platform and, along with Gemini, promises to repay users for errant slashing losses.

Coinbase and Gemini’s most meaningful difference is fees. They both charge commissions on staking rewards, rather than for staking and unstaking crypto. Coinbase generally takes 25% of ETH staking rewards — and 35% on altcoins such as Polygon (MATIC) and Solana (SOL). Gemini, meanwhile, takes only a 15% cut of rewards. (Remember to always do your own research, and carefully consider if staking is right for you.)

Ultimately, investors deserve all the benefits of ETFs and the upside from staking. Everything until then is a stopgap. Thankfully, America’s ice-cold regulatory climate is already starting to thaw. It won’t be long before ETH ETF issuers find a path forward.

Alex O’Donnell is a senior writer for Cointelegraph. He previously founded DeFi developer Umami Labs and worked for seven years as a financial journalist at Reuters, where he covered M&A and IPOs. He is also the crypto growth lead at startup accelerator Expert Dojo.

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Microsoft wants the feds to view its relationship with OpenAI as more of a frenemies (friends and enemies) situation than a real partnership, judging by a report filed with the SEC in July. 

In the filing, a form 10-K periodic financial performance and conditions report, Microsoft declared OpenAI as its rival in several passages while also stating numerous times throughout the document that OpenAI was its “strategic partner.”

Strategic competitors

Interestingly, Microsoft cites dozens of rivals and “intense competition across all markets” in its statements on competition. These include companies ranging from Apple to Nintendo as well as several software and coding organizations.

But the Redmond, Washington company cites only one strategic partner in the entire document: OpenAI.

A cursory examination revealed 72 mentions of the word “partner” including “partnership” and plural versions of both. Among those, it doesn’t appear as though Microsoft actually names any partners aside from OpenAI. Most references were simply to “Microsoft partners” and “our partnerships.”

While this isn’t likely to hold any legal significance, it is noteworthy considering that OpenAI and Microsoft face antitrust probes in the UK, US, and EU over their strategic partnership.

Rival partners

The relationship between Microsoft and OpenAI has had all the hallmarks of a big tech buyout, without the buyout.

In July of 2019, Microsoft invested a billion dollars in OpenAI and became its sole cloud provider, essentially buying the rights to host ChatGPT a few years before it launched.

Once ChatGPT launched, Microsoft invested another $10 billion. Subsequently, Microsoft got early and semi-exclusive access to implement GPT-4 into its own “Copilot” and “Bing” services alongside upgrades to OpenAI’s own services.

In 2023 OpenAI experienced a tumultuous leadership coup that saw CEO and cofounder Sam Altman briefly ousted alongside changes to the company’s board of directors. While Altman was on the outs, Microsoft pledged to hire him and any other OpenAI employees fired or willing to defect and give them their own division within the company.

Altman was ultimately returned to his position at the head of OpenAI and the board was restructured to include an observer seat reserved for Microsoft. Eight months later, in July of 2024, Microsoft renounced that board seat claiming that it no longer believed the observer seat was necessary.

Regulatory scrutiny

Meanwhile, the aforementioned antitrust investigations began heating up with the UK and EU issuing probes in late 2023 and early 2024. As recently as June, 2024, the US Justice Department and the Federal Trade Commission have launched formal inquiries into Microsoft, Nvidia, and OpenAI over concerns related to the trio’s alleged dominance over the AI industry.

While none of this adds up to any cause for alarm just yet — antitrust inquiries are common when it comes to big tech companies — it is noteworthy that Microsoft appears to be framing the narrative around its unique dealings with OpenAI as ordinary rival/partner stuff.

Breakthrough quantum computing research out of Germany could lead to a revolution in particle physics with implications for finance, economics, and cryptocurrency. It might be time for firms in the crypto industry to add chief science officers and particle physicists to their portfolios. 

Much like the tech industry before it, crypto has bootstrapped itself on the virtue of its own feats of engineering and innovation. The engineering and innovation it took to invent blockchain and cryptocurrency are, arguably, analogous to the advent of personal computing and the internet.

Over the past 20 years, however, the tech industry has shifted towards hard science. Perhaps it’s time for crypto to follow suit.

Amazon, IBM, Google, Microsoft, and Meta all have quantum computing laboratories. Some of the most important research in the field of physics and quantum computing have come out of big tech labs.

The realization of time crystals in a quantum processor in 2021, for example, happened primarily in Google’s lab. And both Microsoft and IBM have contributed to pushing the boundaries of “quantum advantage” in their own labs.

Quantum advantage

In their Aug. 2 paper titled “Quantum advantage and stability to errors in analogue quantum simulators,” a team of researchers from the Max Planck Institute for Quantum Optics demonstrated a path to quantum advantage over what’s called the “many-body-model” problem.

Quantum advantage is a non-scientific term referring to something that a quantum computer can do that a classical, binary computer either couldn’t do or couldn’t do quickly enough to be useful.

The researchers in Germany simulated a quantum setup that, according to their peer-reviewed research, is theoretically capable of demonstrating clear quantum advantage in the area of many-body problems. Most significantly, their particular architecture would mitigate errors, one of quantum computing’s biggest outstanding problems.

Crypto physics

Quantum advantage in the area of many-body problems could potentially upend the field of particle physics. Everything from cold fusion to quantum teleportation could be on the table as humanity expands its ability to predict particle physics at expanding scales.

If you've seen the old video game “Pong,” you’ve seen a particle physics simulator. The game challenges you to track a single particle in the form of a ball. If you can imagine trying to track dozens, thousands, or trillions of particles at the same time, you’re getting close to elementary particle physics and the many-body problem.

As the number of particles — or bodies — increases, the problem of predicting particle motion becomes intractable to the point of failure.

Econophysics

We can apply particle physics to finance by imagining every historical, active, and future transaction as a particle. While this may sound unintuitive, the application of physics solutions to economics problems dates back as far as science. In modern parlance, the term “econophysics” was coined to describe the amalgam in the early 1990s as personal computers began gaining traction.

In the same vein, it’s not difficult to imagine “cryptophysics” rising to prominence as quantum computing matures.

Hypothetically speaking, a quantum computer capable of demonstrating advantage over binary computers in solving many-body problems would be orders of magnitude more capable of predicting market movements than any supercomputer.

Bitcoin (BTC) transactions, for example, should be fundamentally simpler for a sufficiently powerful quantum computer to treat as a many-body model problem than fiat currency because we know exactly how much bitcoin there will ever be.

Related: DARPA release highlights difficulty in developing quantum finance solutions

Nvidia’s highly anticipated “Blackwell” B-200 artificial intelligence chip will reportedly be delayed, sending the near-term future of the entire AI industry into a state of uncertainty. 

Tech news outlet The Information claims that a Microsoft employee and at least two other people familiar with the situation have stated that the new chip’s launch date has been pushed back by at least three months due to a design flaw.

While Nvidia hadn’t given a public launch date, CEO Jensen Huang recently announced that the company would begin sending engineering samples “this week” on July 31 at the SIGGRAPH event in Denver, Colorado.

It’s unclear at this time if the reported delay will affect the B-100 series as well as the B-200. While both share similar architecture, the latter is purported to have better performance.

Artificial intelligence chips

Analysts expect Nvidia to sell hundreds of billions of dollars' worth of B-series AI chips to the likes of Amazon, Google, Meta, Microsoft, and dozens of other AI firms. The company’s revenues for 2025 will likely hinge on its ability to produce enough chips to meet the demand. Arguably, the entire AI sector’s fortunes will as well.

Nvidia’s market dominance is startling. With a $2.6 trillion market capitalization, its next closest competitor in the semiconductor industry is TSMC, with a cap of $777 billion.

It may be a stretch to call TSMC a competitor, however, as the Taiwanese company fabricates the bulk of Nvidia’s chips through a strategic partnership.

In the US, Nvidia has next to no competition. A number of tech firms, including Microsoft and Google, are working to develop their own AI chips, but by and large the industry is currently dominated by Nvidia.

Rival chipmakers such as Intel and AMD have so far failed to find a foothold in the generative AI industry. Both are currently in the midst of a pivot to servicing the AI industry.

Related: Tech stocks plummet as Intel nosedives, Nvidia faces antitrust probe

Bubble or balloon?

The second quarter of 2024 wasn’t kind to big tech. Every technology company in the global top 20 by market capitalization is currently down month-over-month (as of Aug. 3, 2024) with the exceptions of Tesla and Apple.

Nvidia’s no exception, despite reaching record stock highs in 2024, it’s trending with the bulk of other tech companies. In the wake of Nvidia’s explosive growth since the launch of OpenAI’s ChatGPT (which was trained on Nvidia chips), investment analysts appear to be getting impatient waiting for the next big thing.

The Financial Times recently reported that hedge fund firm Elliott Management sent a letter to investors warning that Nvidia was “in bubble territory.” The letter also stated that current generative AI use-cases were “never going to be cost-efficient, are never going to actually work right, will take up too much energy, or will prove to be untrustworthy.”

Venture capital firm Sequoia Capital has also issued a recent negative forecast for the AI sector, stating that AI firms needed to make up about $600 billion in revenues to offset expenditures on Nvidia GPUs alone.

In the aftermath of the recent WazirX hack, which resulted in a $230 million exploit, the cryptocurrency exchange’s proposed solution to address the losses has met significant resistance from its user base. 

The crypto community heavily criticized the firm’s plan, known as the “socialized losses” or 55/45 approach, particularly after a user poll reportedly showed overwhelming disapproval of the measure.

Outrage among users

The proposed 55/45 approach suggested that users could trade only 55% of their assets on the Indian exchange while the remaining 45% would be converted into USDT stablecoin or other tokens. These converted tokens would then be locked on the platform. This decision would apply to all users, regardless of whether the hack affected their funds.

Source: TakaSacca19744

The poll for the 55/45 approach, which began on July 27 and concluded on Aug. 3, revealed a significant backlash against the proposal. Users expressed their frustration and dissatisfaction with the plan, feeling that it unfairly impacted all users rather than specifically addressing those who had suffered losses from the hack.

Related: Bankrupt crypto firm Genesis completes restructuring

One user, identified as @aaakasei, voiced their displeasure on social media, suggesting drastic measures for WazirX’s CEO, Nischal Shetty:

“...My suggestion to Nischal Shetty: dude, just file bankruptcy, delete Twitter, and launch memecoins…”

Another user, @TakaSacca19744, questioned the exchange’s transparency and accountability, asking why it is stalling and unfair to its users by taking too long to provide information and resolve the issue.

Community demands better security

The backlash against the 55/45 approach shows the growing frustration and uncertainty among WazirX users, many of whom cannot withdraw their funds. The exchange’s handling of the hack and subsequent communication has left its entire user base feeling vulnerable and uncertain about the future of their investments.

However, WazirX co-founder Nischal Shetty has since emphasized that the poll was merely a means to solicit community input, not a legally binding decision. The Indian cryptocurrency exchange has also refuted allegations by TruthLabs regarding security vulnerabilities that supposedly resulted in a substantial $230 million hack, denying any lapses in their security measures.

The recent hack on the exchange has prompted the Bharat Web3 Association (BWA) in India to prioritize the development of robust cybersecurity frameworks and enhanced consumer protection protocols within the crypto industry.

Magazine: Crypto-Sec: Evolve Bank suffers data breach, Turbo Toad enthusiast loses $3.6K

Bitcoin (BTC) sought to reclaim $62,000 on Aug. 3 as markets inched higher after a fresh liquidation cascade.

BTC/USD 4-hour chart. Source: TradingView

BTC price tests $60,000 in stocks sell-off

Data from Cointelegraph Markets Pro and TradingView showed a 3% BTC price rebound taking shape after fresh multi-week lows of $60,435 on Bitstamp.

These accompanied a grim day for stocks worldwide, with the Nikkei’s 6% drop setting the scene for more losses on Wall Street. United States employment data, which fell far short of expectations, exacerbated the sense of panic.

Bitcoin itself lost nearly $5,000, giving up several key support lines, including the short-term holder cost basis.

Liquidations mounted as a result, with data from monitoring resource CoinGlass putting the total crypto longs wipeout at $230 million for both Aug. 1 and Aug. 2.

Crypto liquidations (screenshot). Source: CoinGlass

“The Yields are falling off a cliff in the U.S. markets as the job reports came in astonishingly bad,” Michaël van de Poppe, founder and CEO of trading firm MNTrading, wrote in a reaction on X.

“Slight panic across the board, as the markets are pricing in a substantial recession for the U.S.”

US 2-year bond yields chart. Source: Michaël van de Poppe/X

Van de Poppe argued that recent events had likely cemented the likelihood of the Federal Reserve cutting interest rates — a key bullish catalyst for crypto and risk assets — at its next meeting in September.

“One thing is for certain: Rate cuts for September are confirmed,” he concluded.

Trading resource The Kobeissi Letter meanwhile summarized the macroeconomic landscape as full of mixed signals.

Source: The Kobeissi Letter

“Yesterday, the discussion was whether a September rate cut was coming or not. Today, the discussion is whether the rate cut will be 25 basis points of 50 basis points,” part of its latest X coverage explained.

Data from CME Group’s FedWatch Tool put market odds of a smaller 0.25% cut at 78% on the day.

Fed target rate probabilities. Source: CME Group

Global liquidity offers Bitcoin bull case

Bullish perspectives on Bitcoin remained in play despite the market shock.

Related: Bitcoin whale volume from exchanges hits 9-year high as analysts call BTC price bottom

Jeff Ross, founder and managing director of hedge fund Vailshire Partners, suggested that rising global liquidity would buoy BTC price action going forward.

Ross uploaded a chart to X comparing the global M2 money supply to BTC/USD and the latter’s 50-week and 200-week simple moving averages (SMAs).

“A reverse head-and-shoulders forming for bitcoin (on the weekly chart) in the setting of increasing global M2 money supply? Would be uber bullish from a combined TA and liquidity perspective,” part of accompanying commentary read.

Global M2 money supply vs. BTC/USD chart. Source: Jeff Ross/X

Even before the bulk of the comedown, Cointelegraph reported on increasing expectations among traders that Bitcoin would retest the bottom of its long-term trading range.

“Bitcoin Has now been trading in this range for more than 5 months,” popular trader Daan Crypto Trades noted.

“We've been seeing lower lows and lower highs as the range has been going on. Key levels remain $59K & $74K for the lows and highs.”

BTC/USDT chart. Source: Daan Crypto Trades/X

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

Crypto executives are scheduled to meet privately next week with White House aides and California Democratic Representative Ro Khanna to address pressing issues and propose policy changes for the next administration. 

According to a Bloomberg report, the roundtable will include high-ranking officials from the Harris campaign, including outgoing senior White House adviser Anita Dunn, National Economic Adviser Lael Brainard, and Deputy Chief of Staff Bruce Reed.

White House engages crypto sector

The participation of these high-ranking officials signals the administration’s willingness to engage with the cryptocurrency sector and address its concerns. It also underscores the rising prominence of digital assets in political discourse and the need for comprehensive regulatory frameworks.

The meeting will follow a previous roundtable held in July, which also saw significant engagement between crypto executives and White House officials. That session included representatives from major cryptocurrency firms such as Ripple and Coinbase Global Inc.

As approximately 50 million Americans have invested in digital assets, both presidential contenders are vying for support and donations from this demographic.

Donald Trump, the Republican candidate, made an early move to court the crypto community, leveraging discontent among industry leaders with the Biden administration’s stringent regulatory approach.

At the July Bitcoin Conference in Nashville, Donald Trump captivated a crowd of thousands with his pledge to transform America into the global hub for cryptocurrency and his vow to dismiss SEC Chair Gary Gensler immediately if reelected.

Seeking to mend fences

Since May, when he started openly supporting the industry and accepting cryptocurrency campaign contributions, Trump has reportedly amassed over $25 million from crypto backers.

Related: Kamala Harris supporting crypto could impact vote in key states — Think tank

In July, advisers to US Vice President Kamala Harris contacted leading crypto firms to mend the fractured relationship between the Democratic Party and the cryptocurrency sector.

Following a letter from Democratic US House Representatives and 2024 presidential hopefuls, there is a growing push for the party to reevaluate its stance on the digital asset sector. The letter emphasizes the need to transition from a perceived adversarial approach to a more supportive one.

The Harris campaign appointed David Plouffe, a veteran strategist who explored opportunities in the cryptocurrency sector after departing the White House in 2013. Plouffe notably joined Binance’s Global Advisory Board in 2022, which was allegedly dissolved later.

However, whether Plouffe’s role will focus on offering counsel on crypto and blockchain issues has yet to be determined.

Magazine: Crypto voters are already disrupting the 2024 election — and it’s set to continue

In a remarkable show of support, over 2,200 letters were sent to US Senators within 48 hours urging them to co-sponsor and support Senator Cynthia Lummis's newly proposed “Strategic Bitcoin Reserve” bill.

According to a post on the X social platform, Senator Lummis expressed gratitude for the support given to the Strategic Bitcoin Reserve bill. The surge of letters sent to Senators reflects a broad spectrum of political support.

Dennis Porter, founder of the Satoshi Action Fund, announced on the X social platform that Democrats received 1,333 letters, Republicans 850 letters, and Independents 41 letters. This bipartisan outreach demonstrates that interest in Bitcoin and its potential strategic value is not confined to a single political ideology but is gaining traction across the board.

Source: Dennis Porter

Senator Lummis, a prominent advocate for cryptocurrency regulation, introduced the Bitcoin Strategic Reserve bill on July 31, 2024. The bill aims to establish a national reserve of Bitcoin, positioning the United States as a leader in the adoption and secure management of this digital asset.

The proposed legislation would direct the US government to create a decentralized network of secure Bitcoin vaults managed by the US Treasury, ensuring strict cybersecurity and physical security measures to protect these assets.

Bipartisan support across political lines

Senator Lummis’ proposal includes ambitious goals, such as accumulating 1 million Bitcoin over time, representing approximately 5% of the total Bitcoin supply. The bill suggests using existing US Treasury funds to purchase Bitcoin like the Treasury’s gold allocation. 

This strategy aims to bolster the country’s financial reserves with a decentralized asset, providing a hedge against traditional financial instruments.

Related: RFK Jr: Only Bitcoin can guarantee US dollar’s reserve currency status

The establishment of a Strategic Bitcoin Reserve could have significant implications for both the United States and the global cryptocurrency market. By adopting Bitcoin as a strategic reserve asset, the US would signal its recognition of Bitcoin’s value and potential as a store of wealth.

This move could also spur other nations to consider similar strategies, further legitimizing Bitcoin worldwide.

Politicians such as Robert F. Kennedy Jr. and Donald Trump, the Republican Party's 2024 presidential nominee, have echoed Senator Lummis' goal of accumulating a significant portion of Bitcoin's total supply, reportedly aiming for 5%.

Magazine: $1M bet ChatGPT won’t lead to AGI, Apple’s intelligent AI use, AI millionaires surge: AI Eye

The cryptocurrency investment landscape witnessed notable movements on Aug. 2, particularly within the Ethereum exchange-traded funds (ETFs) sector. This substantial movement contributed to the current historical net outflow of ETHE, which stands at a staggering $2.117 billion.

According to data from SoSoValue, the total net outflow of Ethereum spot ETFs reached $54.2704 million on Aug. 2, 2024. A significant portion of this outflow was attributed to Grayscale’s Ethereum Trust ETF (ETHE), which saw a single-day net outflow of $61.4314 million.

Grayscale’s Ethereum Trust ETF faces more outflows

Grayscale’s Ethereum Trust ETF ETHE has been a prominent player in the market, offering investors exposure to Ethereum without the need to directly purchase and store the cryptocurrency. However, the recent trend of outflows suggests shifting investor sentiment.

Ethereum ETFs posted a $54.27 million net outflow on Aug. 2. Source: SosoValue

While Grayscale’s ETHE experienced substantial outflows, other Ethereum ETFs showed different trends. The Grayscale Ethereum Mini Trust ETF ETH reported no outflows, maintaining its current net inflow of $201 million. This stability contrasts with the volatility observed in ETHE.

In contrast to the outflows seen in ETHE, Fidelity’s Ethereum spot ETF (FETH) recorded the most significant net inflow yesterday, with $6.0176 million added. This influx of capital brings the total net inflow for FETH to $297 million.

Related: Why is ETH demand lacking post-Ethereum ETF?

Similarly, the Franklin Templeton ETF (EZET) also saw positive inflows, with a single-day net inflow of $1.1433 million. The cumulative net inflow for EZET now stands at $30.6733 million.

Overall dynamics

As of publication, the total net asset value of Ethereum spot ETFs is $8.332 billion. The ETF net asset ratio, which compares the market value of Ethereum held in ETFs to the total market value of ETH, is currently at 2.29%.

The historical cumulative net outflow for Ethereum spot ETFs has reached $511 million, indicating a net withdrawal of funds from these investment vehicles overall.

Meanwhile, on Aug. 1, the daily net inflows into the United States spot Ether exchange-traded funds (ETFs) were positive. The Ether (ETH) ETFs posted a net inflow of $26.7 million, led by a $89.6 million inflow into BlackRock’s iShares Ethereum Trust (ETHA).

ETH is changing hands for $2,987 at the time of publication. Thus, Ethereum has fallen approximately 5.71% since the launch of the ETFs.

Magazine: Decade after Ethereum ICO: Blockchain forensics end double-spending debate

Solana-based memecoin Dogwifhat open interest (OI) has declined amid a broader price decline over the past seven days with traders expecting a near-term retest of a critical support level.

On August 3, Dogwifhat (WIF) OI — which measures the total value of all outstanding or unsettled Dogwifhat futures contracts across exchanges — has fallen to $252.5 million, approximately 28% down from seven days prior on July 27, at $353.4 million, according to CoinGlass data.

On April 1, Dogwifhat hit its yearly high in open interest, reaching $615.16 million. Source: CoinGlass

WIF is currently trading at $1.67, down 35.48% since July 27, according to CoinMarketCap data. Crypto traders expect Dogwifhat to retest the $1.50 level, which has recently been identified as a critical support level in recent times.

“WIF, in the daily timeframe, is in a correction phase and is likely to move down toward the lower support trendline between $1.50 and $1.70,” Cryptorphic wrote in an August 2 X post.

“Price is correcting towards the daily support zone,” crypto commentator Scient stated.

“The price of WIF reached my previous target and is now falling again and will likely retest the $1.5 support,” crypto trader CryptoJack added in a post to his 337,000 X followers.

Future traders not hopeful of quick rebound

Future traders are skeptical of a quick rebound, as $11.89 million in short positions would be at risk if the price recovers to $1.80. Meanwhile, a further 10% decline down to $1.50 would wipe out $7.55 million in long positions.

Related: Dogwifhat jumps 16% — WIF price eyes more gains as Solana ETF hype grows

The price is now significantly farther from the $10 prediction made by Arthur Hayes, the former CEO of BitMEX and current chief investment officer at Maelstrom, in March.

“The hat stays on while I count to $10,” Hayes wrote in a March 14 X post, shortly before WIF hit $3 for the first time.

Cointelegraph reported in June that Dogwifhat had dropped out of the top 50 cryptocurrencies by market capitalization. Since then, it has made a comeback, currently ranked at number 47, just above Sui (SUI).

Magazine: Crypto-Sec: Evolve Bank suffers data breach, Turbo Toad enthusiast loses $3.6K

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

ChatGPT maker OpenAI's current business model is unsustainable because of its lack of clear path to profitability and its excessively high burn rate, claims technology commentator Edward Zitron. However, several industry executives disagree.

“I ultimately believe that OpenAI in its current form is untenable,” Zitron declared in his most recent “Where’s Your Ed At?” newsletter. It follows recent reports that OpenAI could lose as much as $5 billion in 2024, putting the company at risk of running out of cash within 12 months.

Zitron asserted that for OpenAI to "survive" beyond 2026, it will need to secure more funding than any startup in thehistory has ever raised and keep raising it continuously.

Additionally, he claimed that OpenAI must achieve a major technological breakthrough to drastically lower the costs of developing GPT.

Source: Edward Zitron

“Have a significant technological breakthrough such that it reduces the costs of building and operating GPT — or whatever model that succeeds it — by a factor of thousands of percent,” he stated.

He also argued that OpenAI’s use cases need to both create new jobs and automate existing ones to justify the “massive” capital and infrastructure investments required to move forward.

LA Times columnist Brian Merchant echoed a similar sentiment in a July 25 X post that “generative AI is intensely expensive to train and run, and OpenAI is probably gonna have to raise more money this year to stay afloat."

Industry execs disagree

However, not everyone in the industry believes that OpenAI is at risk of bankruptcy.

“OpenAI has changed the world forever and will NEVER go bankrupt!,” Abacus.AI CEO Bindu Reddy wrote in a July 29 X post.

Meanwhile, Ather Energy CEO Tarun Mehta shut down the OpenAI possible bankruptcy rumors when they first emerged in August 2023.

“Uber at its peak was burning 10X more capital for YEARS,” Metha wrote in an August 2023 X post, arguing that OpenAI is “perhaps” one of the most important startups in recent times.

“They will be fine folks,” he added.

Related: OpenAI reportedly considering shift to for-profit as CEO stacks board

In a positive development for OpenAI, Elon Musk withdrew his lawsuit against OpenAI and its CEO, Sam Altman, on June 12. The lawsuit had accused the AI company of straying from its original mission to develop AI for the benefit of humanity rather than for profit.

On February 29, 2024, Musk sued OpenAI and Sam Altman for breach of contract, alleging that the ChatGPT creator strayed from its original mission to develop large language models for the "benefit of humanity, not profit."

Cointelegraph reached out to OpenAI for comment, but did not receive a response by time of publication.

Magazine: Ethereum price will lag for ‘months’ as Bitcoin surges: X Hall of Flame, Roman

The number of transactions on the XRP Ledger (XRPL) fell significantly from Q1 to Q2 of 2024 amid the average transaction cost surging, according to Ripple’s Q2 2024 XRP Markets Report.

The XRPL onchain transaction activity declined by 65.6% during Q2 of 2024, with approximately 86.38 million recorded, compared to 251.39 million in Q1 of 2023, the report published on August 2 highlighted.

“Activity across most major protocols decreased in Q2. XRPL was no exception with on-chain activities noticeably lower in Q2 as compared to Q1,” Ripple stated.

The decline in transaction activity came as the cost per transaction surged 168% during the quarter to 0.00394 XRP (XRP) per transaction. Ripple explained that this cost increases with network load, to protect the peer-to-peer network from spam.

The average cost per transaction in USD spiked 141%. Source: Ripple

The rise in transaction costs and drop in transaction activity is a reversal from the previous quarter's results, when the number of transactions more than doubled from Q4 2023 to Q1 2024, and the average transaction cost was nearly halved.

Despite the decrease in transactional activity, Ripple expects that digital asset exchange Archax will bring "hundreds of millions of dollars" worth of tokenized Real-World Assets (RWA) onto the XRPL in the coming year.

Meanwhile, it further reiterated its plan to launch a stablecoin at some point during 2024, Ripple USD, which will be backed by US dollar deposits, short-term US government treasuries, and other cash equivalents.

Related: XRPL blockchain plugs into cross-chain DeFi

The report's release comes after it was announced that OpenEden, a tokenization platform, has launched tokenized United States Treasury bills (T-bills) on the XRPL.

On August 1, Cointelegraph reported that the platform’s TBILL tokens are backed by short-term US government T-bills and reverse repurchase agreements collateralized by US Treasurys.

Minters of the tokens will be subject to Know Your Customer (KYC) and Anti-Money Laundering (AML) screening to ensure security and regulatory compliance measures are maintained.

Magazine: How crypto bots are ruining crypto — including auto memecoin rug pulls