Germany's Flash Sell-Off 🚨
Germany's Flash Sell-Off 🚨
Is Bitcoin selling being absorbed? Ethereum ETFs to start trading next week? Cardano holders to control $13B blockchain. Staked Ethereum hits 27% of the supply. Solana project to tokenise oil rights.
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The Germany fire sale has been burning up the headlines (and the charts) for weeks.
It’s not ending.
Read: Fire Sale 📉
A series of smaller transfers in recent weeks, and then?
The German government just hit the fast-forward button on their Bitcoin selloff.
We saw their most aggressive move yet.
July 8 - Dumps $900 Million in Bitcoin
In just 8 hours on Monday, they moved over $900 million worth of Bitcoin to crypto exchanges and market makers, according to data from Arkham Intelligence.
Comes after a previous report of $28 million sent to Coinbase and Bitstamp, along with another $28 million to an unknown address.
July 9 - Dumbs another $360 million in Bitcoin
Sold 6306.9 Bitcoin (BTC) – valued at roughly $362.12 million in 3 hours.
The breakdown reveals transactions with major crypto exchanges along with an institutional deposit/OTC services.
Also, 3,623 bitcoins ($203.7 million) were subsequently transferred back to the German government from Bitstamp, Coinbase and Kraken later in the day.
Current Holdings
Despite the sales, the German government still holds a significant amount of crypto, with their current reserves sitting at approximately 22,847 BTC – valued at roughly $1.32 billion.
Germany’s holdings were $3.5 billion a month ago.
Market feels the chill
The market reacted swiftly on July8, with Bitcoin's price dropping nearly 3% in a single hour to $55K following the news. Slightly recovered to $57 on July 9.
Bitcoin has dropped nearly 13% since the German sell-off began.
The recent announcement of repayments by defunct exchange Mt. Gox has also added to sell pressure.
Where'd all this Bitcoin come from?
These Bitcoins originated from the seizure of funds from the now-defunct movie piracy website Movie2k.to back in January.
The German government confiscated 50,000 Bitcoins from the operators.
Some say it’s a test
Ki Young Ju (CryptoQuant CEO): Selling is negligible compared to liquidity.
Alex Krüger (Crypto Trader): Like Mt. Gox outflows, markets will absorb the final leg of the German sell-off.
Daan Crypto: The impact should fade over time.
The Mt. Gox factor
Mt. Gox, once the world's leading crypto exchange, prepares to distribute over $8 billion worth of Bitcoin to creditors.
The funds stem from a massive 2014 hack that shuttered the platform and left many investors high and dry.
Read: Manic Monday 🫨
Bitsmap, one of the crypto exchanges tasked with distributing recovered BTC, says they'll expedite the process.
While the official agreement allows them 60 days, Bitstamp aims to get investors their funds much quicker.
Things to remember
… if you are feeling the blue
Short-term supply pressures won't last: While Germany's sales and Mt.Gox repayments create a temporary supply overhang, these are one-time events.
Once these coins are absorbed by the market, analysts expect a potential rebound.
Wall Street's still there: The tech-heavy Nasdaq is soaring to new highs, and Bitcoin has historically followed this trend.
This suggests a potential bullish path for the crypto. And huge names like blackrock are associated with Bitcoin and Ethereum spot ETfs.
Historically bullish post-Halving periods: Bitcoin underwent its fourth halving event in April. Data suggests that months following a halving often see price corrections followed by significant gains.
Global economies are on the upswing: The G-7, a group of leading economies, is currently experiencing growth. This historically coincides with increased investor appetite for riskier assets like Bitcoin.
Inflation may be slowing down: The upcoming CPI report is expected to show a slowdown in inflation.
This could bolster the Federal Reserve's confidence and potentially lead to rate cuts later this year.
Lower interest rates are generally considered positive for Bitcoin.
Buy Bitcoin ETFs at a discount?
Institutional investors are using the dip as a buying opportunity, snapping up $441 million in digital assets - CoinShares report.
Bitcoin's price crash might be a golden opportunity to buy Bitcoin ETFs on the cheap.
Bitcoin's recent plunge could make Bitcoin ETFs a bargain.
Bitcoin ETFs usually trade at a premium (higher price than actual value). But with the price drop, that premium might disappear or even flip to a discount.
In late 2022, Grayscale Bitcoin Trust (GBTC) offered massive discounts due to regulatory uncertainty. Traders who bought then made a killing when the situation improved.
Watch for similar ETF discounts with BlackRock's IBIT, Franklin Templeton's EZBC, and VanEck's HODL, which also offer low management fees.
Block That Quote 🎙️
ETF Store president, Nate Geraci.
“Will be shocked if spot eth ETFs not trading w/in next 2 weeks”
Crypto investors eagerly awaiting the launch of spot Ethereum ETFs might have to wait a little longer.
Initial launch estimates targeted the week of July 4th, then July 8th, and now the week of July 15 and July 18.
The launch is expected to significantly impact crypto markets, with potential inflows of $500 million in the first week.
The Securities and Exchange Commission (SEC) is still reviewing applications. Their approval is crucial for launch.
Big names like BlackRock, Fidelity, and Grayscale have all submitted updated S-1 documents to the SEC, a crucial step for ETF approval.
Senior ETF Analyst for Bloomberg, Erich Balchunas takes a guess on SEC’s game plan.
Solana ETFs inch closer
Solana investors have reason to be cautiously optimistic.
The Chicago Board Options Exchange (CBOE) filed paperwork with the SEC to list Solana-based exchange-traded funds (ETFs).
The filing, known as a form 19b-4, initiates a public comment period before the SEC makes a final decision.
Cardano Holders To Control $13B blockchain
Cardano (ADA) is on the brink of a big shift (watch).
A hard fork, dubbed "Chang," is set to happen as early as next week.
What is that?
Community takes control: The hard fork will shift ownership of the $13 billion blockchain from Cardano's founding entities to ADA holders, the community.
ADA becomes governance token: ADA holders will gain voting rights on future developments through a DAO-like structure.
Farewell, centralised control: Cardano is overseen by Cardano Foundation, EMURGO, and Input Output Global. The hard fork decentralises the project.
A New Era Dawns: The Voltaire era follows the Basho (scalability) and Goguen (smart contracts) eras, marking a significant step towards Cardano's vision.
What is Node 9.0?
A crucial update by Cardano's developers paving the way for the hard fork.
The latest version of Cardano's validator node software.
Enables the network to undergo the Chang hard fork.
Released on July 8th, 2024.
Key points about the Chang hard fork
Requires 70% of nodes to upgrade to Node 9.0 for activation.
Expected to begin on July 8th or 9th, 2024 (previously targeted for June).
Won't enable full voting functionalities yet (coming in Node 10.0).
Lays groundwork for Delegate Representatives (DReps) elected by ADA holders.
DReps will draft a Cardano constitution – the network's supreme law.
In The Numbers 🔢
$32.6 million
The amount of Ethereum staked in the Ethereum network.
Said who? Coinbase.
The Ethereum network is experiencing a staking surge.
Over 27% of its total supply is currently locked up.
Why? the long-awaited approval of spot Ethereum ETFs in the US inches closer.
However, a key difference exists: unlike investors in the ETF, those staking their Ethereum directly contribute to the security of the network.
There are concerns
"We definitely don't need this much ETH staked, given how Ethereum proof-of-stake has so many times more economic security than proof-of-work ... If your staking pool is running a majority client or runs in the cloud, you are putting your ETH at risk."
The upcoming Ethereum ETFs, due to regulations, won't be able to participate in staking themselves.
This hasn't deterred traditional finance players.
Investment giants like Franklin Templeton are exploring alternative avenues to tap into staking rewards through dedicated funds.
Solana Project To Tokenise Oil Rights
The latest attempt to bring real-world assets (RWA) onto the blockchain.
A new Solana project called Elmnts.
This allows investment in oil and gas rights through tokens.
So far, only tokenised gold has achieved success in the crypto market.
What do we know about Elmnts?
Believes royalties from oil wells offer a steady income stream uncorrelated with crypto markets.
Their first product is a tokenised fund with "north of 20%" yields from Chevron-operated land.
Users can invest with USDC stablecoin or ACH and don't need a pre-existing crypto wallet.
Targets accredited investors with securities exempt from SEC registration.
Charges a 0.69% management fee and earns 6.25% in equity on invested funds.
Atoms - future lending protocol to allow using Elmnts' tokens as loan collateral.
Beta software release is expected in the coming weeks.
The Surfer 🏄
Ethereum is launching its first-ever hackathon called the "Attackathon" to test the blockchain's security. The hackathon will have a reward pool of $2 million and aims to be the largest crowdsourced security audit of Ethereum's codebase.
Lionel Messi is promoting a Solana-based memecoin called WaterCoin on Instagram. WaterCoin aims to raise awareness for water-related issues and become an ecological coin in the future.
Bitfinex Securities failed to attract the minimum funding needed for its El Salvador Hilton hotel project. Only $342,000 was raised, far short of the $6.25 million target.
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