2024-03-04 06:06

Open interest in SHIB futures has crossed above $100 million, hinting at speculative froth. Open interest in SHIB futures has crossed above $100 million, hinting at speculative froth. One analyst said that the supply-demand imbalance for bitcoin has grown to 1:10, indicating a rally to record highs this week. Speculative excess is building in the crypto market, suggesting caution to bitcoin (BTC) bulls as the leading cryptocurrency by market value looks to challenge record highs. The notional open interest or the dollar value locked in the active perpetual futures contracts tied to meme cryptocurrency shiba inu (SHIB) has crossed $100 million for the first time since August 2023, according to CoinGlass. SHIB futures are sized at 1,000 SHIB per contract with up to 25 times leverage. In the past seven days, SHIB’s market capitalization has surged over 130% to $13.44 million, beating the 22% rise in the CoinDesk 20 index. An increase in open interest alongside an uptick in market value represents an influx of new money into SHIB. However, it’s a sign of speculative excess and an impending correction to the broader market. Previous instances of an above-$100 million open interest in SHIB futures have marked interim/local bitcoin price tops. SHIB is not the only one signaling speculative froth. Data tracked by 10X Research shows volumes in South Korea have averaged at or near $8 billion recently, up significantly from $1 billion per day observed before the bitcoin bull run gathered steam. “There is a wave of retail activity occurring from altcoins to meme-coins,” Markus Thielen, founder of 10X Research, said, referring to the uptick in trading volume on Korean exchanges. Thielen added that bitcoin could set a new all-time high above $69,000 this week as inflows into the U.S.-based spot ETFs continue to be significantly more than the number of BTC created per day. That has caused the supply-demand imbalance to grow to 1:10. “Over-the-counter (OTC) trading desks are dealing with large institutional clients, and according to their aggregate inventory data, balances have decreased from nearly 10,000 Bitcoins in Q2 2023 to less than 2,000. This shows that institutions such as the Bitcoin ETF issuers, through their market makers, will have to purchase Bitcoins directly from exchanges. The supply/demand imbalance is 1:10 (daily mined vs. daily ETF demand),” Thielen noted. Outflows from Grayscale’s spot ETF (GBTC) gathered pace late last week, with the fund losing $600 million on Thursday, its largest single-day redemption in over a month. Meanwhile, as per 10X Research, inflows into BlackRock’s IBIT cooled to $202 million on Friday after three consecutive days of $500-600 million. Per Thielen, the slowdown is a temporary month-end phenomenon, and strong inflows could resume this week. “We expect BlackRock inflows to resume this week. If Grayscale’s flows drop to less than $100m outflow, bitcoin will make a big move up,” Thielen noted. Bitcoin changed hands at $63,300 at press time, representing a 2% gain on a 24-hour basis and a 22% rise in seven days. https://www.coindesk.com/markets/2024/03/04/shiba-inu-rings-greed-alarm-as-bitcoin-eyes-record-high/

2024-03-04 05:58

In May 2023, the SEC settled charges with Ishan Wahi and Nikhil Wahi in what it has called the "first-ever insider trading case involving cryptocurrency markets." Trading of certain crypto assets on a secondary market, such as Coinbase, are securities transactions, a U.S. court ruled on Friday. The court took this critical position in a default judgment against Sameer Ramani, one of three accused in the insider trading case. In an insider trading case involving Coinbase’s former product manager Ishan Wahi, his brother Nikhil Wahi, and their friend Sameer Ramani, a U.S. court ruled on March 1, that the trading of certain crypto assets on a secondary market, which Coinbase is, are securities transactions. “The court’s analysis remains the same even to the extent Ramani traded tokens on the secondary market,” the ruling said. “... Each issuer continued to make such representation regarding the profitability of their tokens even as the tokens were traded on secondary markets. Thus, under Howey, all of the crypto assets that Ramani purchased and traded were investment contracts.” The court took this critical position in a default judgment against Ramani. A default judgment is given when the defendant fails to respond to a court summons or does not appear in court. “Ramani appears to have fled the country to avoid criminal prosecution for the actions alleged in this case,” the filing said. In May 2023, the SEC settled charges with Ishan Wahi and Nikhil Wahi in what it has called the “first-ever insider trading case involving cryptocurrency markets.” However, while this or some action against Ramani was expected, the judgment assumes extra significance because the crypto industry and Coinbase (COIN) have been arguing that cryptocurrencies are not securities and hence, do not fall under the SEC. The SEC Chair Gary Gensler has often argued that most cryptocurrencies fit the definition of securities and that crypto exchanges need to register with the SEC. This is also not the first time a U.S. court has adjudicated whether sales of certain cryptocurrencies are unregistered securities, whether on secondary platforms like exchanges or not. In July, Federal District Judge Analisa Torres ruled that while Ripple violated federal securities laws in selling XRP to institutional investors directly, it had not done so by making XRP available to retail customers through programmatic sales to exchanges. However, in Dec. 2023, Judge Jed Rakoff disagreed with Judge Torres in the Terraform Labs case. The court ruled to prohibit Ramani from future violations, a civil penalty of twice the amount of proceeds Ramani is calculated to have gained, which was a total of $1,635,204, and disgorgement of the identified proceeds amounting to $817,602. However, the court denied the SEC’s request to impose prejudgment interest. Read More: Opinion: What’s Uniting the SEC’s Crypto Cases Nikhilesh De contributed reporting. https://www.coindesk.com/policy/2024/03/04/us-judge-enters-default-ruling-against-ex-coinbase-insider-says-secondary-market-sales-are-securities-transactions/

2024-03-02 16:00

The Taiko project, distinguished for its "based sequencing" architecture, is one of several competing for relevance among a deep field of Ethereum layer-2 networks. Taiko has raised $15 million in a series A fundraising, bringing its lifetime outside investment total to $37 million. Project claims to be an "Ethereum-equivalent ZK rollup" with "based sequencing" – both tipped as technological breakthroughs – but Taiko faces a crowded field of competitors among Ethereum layer-2 networks. Taiko, a layer-2 scaling solution provider for the Ethereum blockchain, has raised $15 million in a series A funding round, adding to the growing amount of investment allocations to crypto projects from venture-capital firms. The fundraise was led by Lightspeed Faction, Hashed, Generative Ventures and Token Bay Capital, according to a press release. Other investors in the round included Wintermute Ventures, Presto Labs, Flow Traders, Amber Group, OKX Ventures, GSR and WW Ventures. The latest round brings Taiko's total fundraising across three rounds to $37 million. Taiko says it provides an "Ethereum-equivalent ZK rollup" – described by Ethereum co-founder Vitalik Buterin in a 2022 post as the holy grail of technological achievement for these scaling networks. A "rollup" is a term for a layer-2 chain, which acts like an auxiliary network to provide faster and cheaper transactions that can then be settled to a main or "base" blockchain like Ethereum. The "ZK" refers to "zero-knowledge" cryptography, a hot trend in blockchain design. In January, Taiko debuted its "Katla" test network, billed as the last key milestone before a main-network, or mainnet, launch expected soon. But there's a lot of competition. The website L2Beat lists 44 active layer-2 projects, and another 34 "upcoming projects," including Taiko. Notably, Taiko claims to use a technology known as "based" sequencing, where a key component known as the "sequencer" is driven by the base, or layer-1, blockchain. In the architecture of blockchain networks, a sequencer is a component of a layer-2 chain that works like an air-traffic controller, bundling up transactions so they can be finalized in a data block. In many of the rollups currently in operation, a centralized sequencer is used – seen as a potential single point of failure or censorship vector. “Amongst an explosion of new rollups, Taiko stands out due to its passionate community, paired with a based sequencing architecture, which uniquely simplifies the L2 value chain, streamlining trust assumptions and removing friction for developer adoption,” said Samuel Harrison, founding partner at Lightspeed Faction. https://www.coindesk.com/tech/2024/03/02/taiko-a-layer-2-blockchain-atop-ethereum-raises-15m/

2024-03-02 13:55

Pepe (PEPE), the frog-themed meme token on Ethereum, was up as much as 100% to set record highs. Volume of futures tracking meme coins continued to rise massively on Saturday as bets against non-serious tokens lost a cumulative $50 million in the past 24 hours, a sign of irrational exuberance. Data from Coinglass shows shorts, or bets against, on dogecoin, shiba inu, pepe, floki and bonk saw over $50 million in liquidations in the past 24 hours, contributing to price surge among these tokens. Liquidation refers to when an exchange forcefully closes a trader’s leveraged position due to a partial or total loss of the trader’s initial margin. It happens when a trader is unable to meet the margin requirements for a leveraged position (fails to have sufficient funds to keep the trade open). Pepe (PEPE), the frog-themed meme token on Ethereum, was up as much as 100% to set record highs. WIF, the dog-themed token on Solana that was issued in November was up as much as 80% to become one of the first prominent meme tokens to cross the $1 price mark. Meme coins started to come into focus last week as proxy bets on the growth of whichever blockchains these tokens are based on. Ethereum-based dogecoin (DOGE), shiba inu (SHIB), pepe (PEPE) and floki (FLOKI) have captured most of the meme trading volume on that network, while bonk (BONK) and dogwifhat (WIF) have acted as Solana proxies. Bullish bets on DOGE set a record on Thursday with $1 billion in opened positions. Nearly 70% of those betting were longs, or on the continued growth of the tokens. DOGE prices are up more than 50% since CoinDesk first reported the peak volumes. Open interest in PEPE, SHIB, BONK and FLOKI has similarly grown multifold to a cumulative $1.5 billion in the past few days, Coinglass data shows. A rise in futures bets indicates new money entering the market. Meanwhile, the CoinDesk 20 Index (CD20), a benchmark for the biggest and most liquid cryptocurrencies, jumped nearly 5%. Meme tokens are usually considered to have no intrinsic value but are quickly gaining favor among traders. Some, like the Avalanche Foundation, a non-profit that maintains the Avalanche blockchain, have even started to invest in meme tokens built on the network in recognition of the online culture and memetic value that such tokens can drive among investors. Market observers say meme coins are also a profitable, albeit risky, way to gain from ecosystem growth. “While meme tokens have been out of the narrative, they often pump following blue chip rallies, and traders reposition from ETH and BTC to altcoins,” Nick Ruck, COO of ContentFi Labs, told CoinDesk in a Telegram message last week. https://www.coindesk.com/markets/2024/03/02/shib-wif-climb-60-as-shorts-lose-50m-betting-against-meme-coins/

2024-03-02 13:18

As reported last week, the burn removes 2% of the tokens from the circulating supply. The price of dog-themed token floki (FLOKI) surged by more than 100% in the past 24 hours as a proposal to burn 2% of the token’s supply was passed by the community, proposal data shows. Nearly 90% of votes favored the burn, with the top voter staking 117 billion tokens. The event is expected to occur after a seven-day period. Burns refers to permanently removing tokens from circulating supply by sending them to a crypto wallet that no one controls. Floki previously conducted a burn event in January 2023. Last week, developers proposed removing 190 billion tokens, worth $11 million at the time, increasing network security and boosting bullish sentiment for the tokens. The burn plans were first reported on CoinDesk and prices have been up 140% since. The tokens for the proposed burn will originate from the supply stored on the Multichain bridge. Multichain was a platform that let users transfer tokens between various networks – but imploded in July 2023 after an exploit saw over $130 million in funds stolen from the platform. A euphoria around meme coin investing likely contributed to the massive FLOKI surge, with prices of prominent tokens dogecoin (DOGE), shiba inu (SHIB) and bonk (BONK) up more than 50% in the past week. The meme coin category tracked on CoinGecko is up 40% in the past 24 hours, while CD20, a broad-based liquid index, is up 4%. https://www.coindesk.com/markets/2024/03/02/floki-prices-surge-100-as-burn-proposal-passes/

2024-03-02 12:00

One part community, one part prediction market, the meme coin that borrows the former president's likeness is a troll project that became serious. One day, the Donald Trump-themed MAGA coin, which surged nearly 400% over the last month according to CoinGecko data, and boasts a market cap of over $285 million, might enter the meme coin hall of fame alongside the category's canine icons. "My intention is really to have this up there with a DOGE or SHIB, that kind of scale and market cap and popularity," the project's marketing director, YouTube talk show host Steven Steele, said in an interview with CoinDesk. It might sound absurd, but this is crypto. Remember, those two dog-themed meme coins have market caps well into the billions, but they started as jokes. As memes. Since then, Shiba Inu stewards have floated Shibarium, their own blockchain ecosystem, while the Dogecoin community is similarly working on several real-world use cases. Meme coins are a polarizing issue in crypto. For some, they represent the worst, most “degenerate” aspects of the global crypto casino while for others, they capture the lighthearted spirit that comes with the herculean task of trying to reinvent the global financial system — an ethos the Avalanche Foundation captured recently when saying it would invest in these community-building in-jokes. It’s a divide many meme coin projects are trying to mend by directing their tokens toward useful purposes (or saying they are). Steele said that his Trump coins actually have a form of utility. It's the first chapter of an experiment in PoliFi, merging politics, finance, and community. (The name is a portmanteau a la DeFi, short for decentralized finance.) Predicting success? Apparently, Steele noted, whenever there's been a major event involving Trump, there has been “a direct correspondence in the value of the coin," making it a prediction market of sorts. "It's evolved to become this kind of de facto betting market on the election for many investors," Steele said. The supposed accuracy of the coin movements is the most amusing part of this great big joke, for Steele. While there are prediction market contracts that would allow a trader to monetize their belief in the success of the Trump campaign, Kang argued that this token offers a superior rate or return. Call it a value proposition, so to speak. Prediction markets have been accused the same sort of degeneracy as meme coins. While being a useful hedge against macroeconomic calamity, there are plenty of contracts out there for the absurd, such as the date of Taylor Swift's possible pregnancy announcement or if John McAfee is still alive. "Prediction markets do not offer the same return potential or profile as meme coins," he said. "While it is possible to achieve 100x or 1,000x returns with meme coins like TRUMP, prediction markets are not liquid enough to generate nine-figure returns." On the prediction market Polymarket, a contract regarding Trump's chances of winning the presidency has over $6 million in liquidity with some bets well over a half-million dollars. In contrast, an open bet about President Joseph Biden's chances of winning re-election – effectively the same question but reversed – has just under $4.5 million in liquidity. The road map is the election season Biden coins have been attempted, but none of them have really "caught fire" as Steele puts it. On-chain data supports this. The largest Biden meme coin has a market cap of $340,000, and its chain activity looks like a relative ghost town in comparison with 1,500 holders versus the 7,433 for TRUMP (which is the largest holding in the former president's wallet identified by Arkham). It’s not quite clear whether the relative success of meme coins is an accurate way to test the temperature of a candidate’s prospects — in the way some view prediction markets. While token holders certainly have “skin in the game,” in a sense, bettors aren’t trying to adjudicate any likely outcome outside of whether the price will go up. It could be that meme coin holders have a sense of degeneracy not found in prediction market bettors, simply because at the end of the prediction market contract, the value of the losing side goes to zero. Trump coins might have life after November 5, 2024. "In the meme scene, people want a rabble-rouser, someone exciting and unpredictable, perceived as a total rebel," Steele said. "Trump embodies all of those qualities in the eyes of many." As for the project's roadmap, well, that's the election season. "The roadmap is tied to election-related events, particularly those involving Donald Trump. As the election season heats up, he's going to provide plenty of fodder," Steele said. For the terminally online, there's something particularly captivating about Trump, a natural gravity towards him. And just as Trump inadvertently gives value to the litany of unsanctioned Donald-themed coins, the MAGA coin team is trying to give back to Trump’s fanbase. Steele said that one of the activities that the decentralized autonomous organization (DAO) behind the MAGA coin has been doing is "sweeping the floor" of the first series of official Trump-themed non-fungible tokens (NFTs), used as a fundraising tool by the former president, to build interest in both his unofficial token and official NFT series. "That's been pretty successful because we've really focused on Series One of Trump's official NFTs, where the floor price wasn't that impressive until we started sweeping the floor. This has caused a resurgence and excitement among his NFT holders," he said. Steele also said that some of the proceeds from MAGA coin sales go to charitable endeavors that assist victims of child trafficking and shelter homeless veterans. It's an investment, not a vote NFTs and DAOs have long been touted as enabling online communities and providing a way for these groups to monetize their memberships. Yuga Labs is testing exactly this with its collection of Bored Ape Yacht Club NFTs, which act as tickets to real-life events. But it's hard to articulate what the BAYC NFT community stands for. Certainly, there's a shared interest in crypto, but that's a fairly broad topic. And some things in the BAYC universe have fallen flat, like the Kingship ape band which lacks a critical mass of traffic on its videos. Sinking floor prices would suggest the community has its attention focused elsewhere. In contrast, much has been written about the kinship of Trump supporters. Be it political and economic disenfranchisement, conservative politics or a shared love of trolling, Trump has a vote that sticks. Consider that the day of Trump's indictment was one of his best yet for fundraising. However, not all Trump token holders are part of this club. They aren't necessarily voters. It's crypto, and when the number goes up people buy in. "It's kind of a rallying cry for people who are Trump enthusiasts, but also, we have a fair amount of investors who aren't necessarily Trump fans, either they just see what they perceive to be a great investment," Steele said. In February, Mechanism Capital's Andrew Kang laid out his non-partisan investment thesis for the Trump token. The investment is based on the attention economy, with Trump being a constant in the news cycle due to the U.S. primary elections and his provocative nature. The bet is on his continuous media presence, not just his potential election win, Kang wrote on X. The bet is on his continuous media presence, not just his potential election win, and Trump is probably one of the best attention monopolizers in the world," Kang wrote on X. In an interview with CoinDesk, Kang said that a "surprising number" of fund managers and VCs have reached out to express interest in the Trump coin, calling the attention token a subcategory of altcoins. "Sharp investors and traders are always looking for the next coin that will drive the greatest returns and recognize that Trump fits that bill well, given his ability to galvanize attention," he said, adding that professional token investors are alongside die-hard MAGA supporters in their HODLing. Post-election – which Kang says Trump will win – there might be a “sell the news” effect if the coin has experienced significant growth. "However, I anticipate a period of consolidation following his election victory, similar to how dogecoin behaved after it became associated with Elon Musk," he said. As for his personal support for the former president, Kang said he personally hates politics. "I don’t like spending my time thinking about it or having discussions around politics," he said. "Trump is entertaining enough for me to get over that." Shaurya Malwa contributed to this report. https://www.coindesk.com/markets/2024/03/02/trump-maga-meme-coins-are-the-first-experiment-in-polifi/