First Mover Americas: Bitcoin Nears $24K as Citi Sees Crypto Contagion in Past (Don't Tell Zipmex)

In today’s newsletter:

• Price Point: Bitcoin was pushing back toward $24,000 as U.S. Treasury bond yields tumble. Ether extended its extraordinary rally (up 52% this month alone) after comments Thursday on the Merge by co-founder Vitalik Buterin.
• Market Moves: Binance clarified that coins deposited in its recently launched staking program for proof-of-work (PoW) token dogecoin (DOGE) and litecoin (LTC) would remain with the exchange and will not be lent out for generating additional yield. Omkar Godbole reports.

Price Point

Bitcoin (BTC) was trading up 3% on the day after a positive week for the cryptocurrency. BTC reached highs of $24,250 on Wednesday, its highest since mid-June.

Ether (ETH) was up 9% on the day, extending this month's spectacular rally, with a 52% price gain in July alone. On Thursday, Ethereum co-founder Vitalik Buterin spoke about the network's upcoming Merge at the Ethereum Community Conference in Paris. He said that in terms of Ethereum’s overall network development, the protocol will be “55% complete once we finish the Merge.” Thus, there is much more work for developers ahead.

(By the way, if you didn't catch my dispatch this week from the EthCC conference in Paris, that's here.)

NEAR protocol was also trading in the green on Friday, up 11%. Uniwap's UNI was up 8%.

In traditional markets, stocks were on track for their best week in a month. The yield on the 10-year U.S. Treasury note declined by seven basis points (0.07 percentage point) to 2.81%. The yield is down from nearly 3.5% a little over a month ago, a trend that some economists suggest could be a signal that a recession is coming.

Meanwhile, Three Arrows Capital (3AC) has finally broken its silence in an interview with Bloomberg. 3AC founders Su Zhu and Kyle Davies discuss how one of the most successful crypto funds went from being a prominent trading desk to owing creditors $2.8 billion.

The duo described the collapse as "regrettable," but denied claims that they pulled money from the fund before its collapse, according to the report.

CoinDesk's Nikhilesh De reported the U.S. Securities and Exchange Commission (SEC) and Department of Justice (DOJ) brought insider trading charges against three people Thursday, but assertions cryptocurrencies are securities may hold greater implications.

The SEC formally declared nine digital tokens as “securities“ in its ongoing practice of defining its crypto oversight through enforcement actions.

And finally, Citigroup said in a report Wednesday that with numerous brokers and market makers making counterparty exposure disclosures, Celsius filing Chapter 11 and staked ether (stETH) returning towards parity, it is likely crypto contagion fears have peaked in the interim.

(It's important to note: Just this week, the Singapore-based cryptocurrency exchange Zipmex apparently became a fresh victim of the contagion, when it halted deposit withdrawals. Zipmex said Thursday in a Facebook post that it was dealing with some $53 million of combined exposure to the troubled crypto lenders Babel Finance and Celsius.)

Staked ether’s discount to ether has narrowed, which suggests some liquidity stress may have passed, the report said. The “acute deleveraging phase” has now ended given many of the large brokers and market makers in the sector have disclosed their exposures, according to the bank.

Market Moves

Binance clarified that coins deposited in its recently launched staking program for proof-of-work (PoW) token dogecoin (DOGE) and litecoin (LTC) would remain with the exchange and will not be lent out for generating additional yield.

In an e-mail to CoinDesk, the exchange's spokesperson said on Friday, "there is no on-chain staking of LTC and DOGE for network validation since these are non-proof-of-stake tokens. The user funds remain with BINANCE and we have very strict risk management controls to ensure their security."

The explanation comes after several prominent social media influencers and investors disapproved of the program after it went live on Tuesday, questioning how it is possible to stake coins like DOGE and LTC, as their parent blockchains use a proof-of-work consensus mechanism.

"Oh boy. @Binance announced another 'holding' program. This one is referred to as 'Locked Staking,' and it allows you to 'stake' LTC and Dogecoin. How is that even possible when #LTC and #Dogecoin are PoW cryptos," a popular dogecoin-focused Twitter handle Mishaboar tweeted on Tuesday.

Read the full story here: Binance Says It Does Not Stake or Lend 'Locked' Dogecoin

Latest Headlines

• Binance Says It Does Not Stake or Lend 'Locked' DOGE: Binance's clarification comes after Twitterati questioned the inner working of the staking product dedicated to proof-of-work coins.
• Synthetix's SNX Rises 14% on Liquidity Deal Renewal With Jump Crypto: Synthetix has traded over $2.8 billion worth of on-chain assets following the launch of atomic swaps earlier this year.
• Three Arrows Capital Founders Break Their Silence, Look to Move to Dubai, Bloomberg Reports: The beleaguered duo discuss how one of the most successful crypto funds went from being a prominent trading desk to owing creditors $2.8 billion.
• Citi Says Crypto Contagion Appears to Have Ceased: Stablecoin outflows have been stemmed, and outflows from ETFs have also stabilized, the report said.
• Taiwan Set to Ban Crypto Purchases Using Credit Cards, Local Media Reports: The country's financial regulator sent a letter to the banking association asking credit card companies to stop taking on crypto firms as merchants.
• SEC Hasn’t Subpoenaed Binance About BNB, FOIA Response: A Freedom of Information Act request by CoinDesk shows no record of a subpoena sent to Binance regarding BNB in 2022.
• South Korean Prosecutors Raid Terra Co-Founder Daniel Shin's Home, According to a Local Media Report: South Korean authorities are continuing their investigation into fraud allegations at the center of the Terra collapse.

This web version of today's First Mover newsletter was produced by Sage D. Young.