Dispatch #143: Crypto Winter in the Midst of Summer

Jun 09, 2023 3 min read

Dispatch

In this patch of your weekly Dispatch:

The SEC targets two big players 🏹
Seismic energy in El Salvador 🌋
Markets’ remarkable resilience 💪

The Big Idea

The SEC Chills Crypto

The astronomical summer is fast approaching in the western hemisphere, but crypto winter vibes are still in the air. This week the industry was chilled with news of enforcement action against two of the most founding digital asset players in a quick 1-2 succession – Coinbase and Binance.

The charges against the two companies differ and seem unrelated to one another. While allegations against Binance could target primarily and individually CEO Changpeng CZ Zhao, the accusations towards Coinbase include a much broader spectrum, if not the entire industry some would argue.

In the event that the lawsuits succeed, they could transform the crypto market by asserting the SEC's authority over it – a long-standing point of contention between the SEC and CFTC themselves.

There are more than a few silver linings here: if the ongoing SEC vs Ripple case is anything to go by, we are looking at a lengthy process, where the crypto community will undoubtedly look to take a united stand. And there still are powerful forces in play in the space.

Only time and BTC will tell, the latter commendably resilient.

The Latest In…

BTC and ETH Bulls in the House

Crypto markets appear to display a wave of optimism as funding rates for Bitcoin and Ether remain positive, reflecting a bullish sentiment in derivatives markets.
Judging from their price trajectories, Bitcoin and Ether may have decoupled from traditional finance.
The CoinDesk Indices Ether Trend Indicator shows a "significant uptrend," signaling increased strength and momentum for Ether.

The Latest In…

El Salvador’s Volcano Energy Еrupts

A volcanic surge in the world of Bitcoin mining. Volcano Energy ignited the industry with a staggering $1B commitment to develop a massive 241 MW Bitcoin mine in El Salvador's Metapán region. Among the investors joining the eruption is none other than stablecoin giant Tether. With 169 MW of solar energy and 72 MW of wind energy, this groundbreaking mining site will unleash a computing prowess exceeding 1.3 exahash/second (EH/s), with the local government playing a pivotal role in the planning and execution.

The Latest In…

A New Bill on Decentralization

Amid the SEC’s enforcement actions, the U.S. House Republicans are seeing to provide a path for tokens to be treated as commodities rather than securities. They proposed a draft bill that:

Aims to define when a project is sufficiently decentralized so that its tokens are no longer investment contracts.
Hopes to clarify the place of digital assets within U.S. financial law, recognizing the unique aspects of blockchain-based tokens.
Leaves it to the SEC and CFTC to decide which projects qualify as decentralized.

This move marks a significant step towards a more investor-friendly market structure for digital assets in the U.S.

The Week’s Most Interesting Data Story

BTC Markets in Cold Blood

Тhe market became highly volatile following the events of the week, with prices swinging in both directions. However, the losses actually realized and recorded on the blockchain remained relatively low at $112М. It's worth noting that this is a massive 96.5% smaller than the largest drop in value ever seen, showing that investors are demonstrating increased resilience in the face of tough market conditions.