Weekly Recap
July 6, 2024
Crypto Fundamentals #84
This week, ‘Decentralized’ AI network Bittensor halted in response to $8M hack (Protos), Multicoin Pledges up to $1M for Pro-Crypto Senate Candidates (Coindesk)
Alex Weseley
Research
This week, ‘Decentralized’ AI network Bittensor halted in response to $8M hack (Protos), Multicoin Pledges up to $1M for Pro-Crypto Senate Candidates (Coindesk)
This week, ‘Decentralized’ AI network Bittensor halted in response to $8M hack (Protos), Multicoin Pledges up to $1M for Pro-Crypto Senate Candidates (Coindesk), crypto Twitter goes after Polkadot for bad marketing spend (X), and Trump Sparks Talks Of Bitcoin As A Strategic Reserve Asset (Forbes).
🌞 Polymarket Makes All-Time Highs
💫 Mt Gox Begins Long Awaited Repayments
Crypto markets continued to bleed this week, as major tokens declined an average of 11%. Move-based alternative layer 1s Sui and Aptos saw some of the biggest losses at roughly 18% each. Ethereum rollup Optimism was the week’s largest mover as it lost 23.4% of its market value, seeing nearly $1m in liquidations on July 4th. Other Ethereum rollup tokens ARB and MATIC were not far behind, posting losses of 14.9% each. Tron’s TRX was this week’s sole gainer among select major tokens.
Federal Reserve Chair Jerome Powell stated that the Fed has made significant progress in reducing inflation, but he emphasized the need for more evidence before considering interest rate cuts. Speaking at a central banking forum in Portugal, Powell highlighted that recent inflation reports suggest the economy is returning to a disinflationary path, but the Fed requires greater confidence that inflation will sustainably decrease to the 2% target before adjusting policy. He also noted the risks of both premature and delayed rate cuts, which could either reignite inflation or unnecessarily hinder economic growth.
According to Arkham Intelligence, the German government has been moving seized Bitcoin worth hundreds of millions of dollars to exchanges. It's worth noting that this sell-off has been criticized by some German politicians. For instance, MP Joana Cotar has urged the government to stop the "hasty" Bitcoin selling spree, arguing that Bitcoin could be used to diversify treasury assets and protect against currency devaluation. She suggests that instead of divesting, the government should develop a comprehensive Bitcoin strategy, which could include keeping Bitcoin in the state treasury, issuing Bitcoin bonds, or creating a conducive regulatory environment.
Polymarket is the world’s premier decentralized prediction market. Deployed on Polygon, the platform allows users to trade the outcomes of future events such as presidential elections, NBA games, and even whether or not Cristiano Ronaldo will cry during the Euro semifinals.
Over the past couple of months, as the US elections have started to heat up, Polymarket has been the center of activity as traders aim to profit on the US election cycle. Monthly trading volume reached above $100m in June, with over $10m in trading volume on June 28th, the day after the first US presidential debate.
Polymarket has seen more than 2,000 daily active users consistently over the past several weeks, nearly reaching 4,000 on the 28th of June.
However, this number makes up only a fraction of total DAUs on Polygon, the rollup Polymarket is deployed on. The top applications on Polygon by DAUs are Matr1x (365k), Tether (56k), and Project Galaxy (30k).
This shows that Polymarket still has a ways to grow before becoming the top application on Polygon. In May, Polymarket raised $45 million in a Series B funding round led by Peter Thiel’s Founders Fund, with participation from Vitalik Buterin. While some people on Twitter have started speculating that this might be the first consumer application to find organic PMF in crypto, other have said that activity is mostly driven by US presidential elections. Time will tell if volume remains on the platform after the end of the US presidential election cycle.
Mt. Gox, the defunct Bitcoin exchange, is set to start repaying its creditors today, July 5th, marking the end of a decade-long wait for those affected by its collapse in 2014. Once the world’s largest crypto trading venue, Mt. Gox filed for bankruptcy in February 2014 after a series of heists that saw up to 950,000 bitcoin — worth upward of $58 billion at today’s prices — vanish. The exchange has since recovered 140,000 of the missing bitcoin which had been worth $600 each at the time of the heists. Today each bitcoin is worth around $55,000. The exchange will distribute approximately 142,000 Bitcoin (BTC), 143,000 Bitcoin Cash (BCH), and 69 billion Japanese yen (about $432 million) to around 127,000 creditors (Business Insider). This distribution is valued at around $9 billion.
The large influx of Bitcoin into the market has raised concerns among traders and analysts about potential selling pressure and its impact on Bitcoin prices. While some predict that a portion of the distributed Bitcoin will be sold, others believe that the actual number of coins sold might be lower than anticipated due to tax implications and the long-term holding behavior of creditors. Despite these market concerns, the commencement of repayments is seen as a significant step towards resolving one of the most notable incidents in cryptocurrency history.
Blockchain analytics firm Arkham has been keeping the community up to date with movements of funds from Mt. Gox associated wallets (X/ArkhamIntel). They noted that Mt Gox had moved nearly $3bn worth of bitcoin towards the end of the week, indicating that the repayments were about to begin.
Summary graphic of Mt. Gox distributions by Galaxy Research:
Subscribe to our newsletter and understand what’s happening on-chain.