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Bitcoin has been neutral for the past month. We were expecting at least a small bounce, which would have been the least surprising move statistically. However, the absence of a bounce indicates that the market is leaving clues for us to interpret. Will there be a delayed bounce later in the summer, or are we witnessing a situation where bears are being lured into a trap?

Volatility has continued to fluctuate in the "Normal" range, but it is noteworthy how it has diminished with each meandering movement. Volatility can be compared to a rubber band, so it's important to keep this in mind as the range continues to contract.

The year 2023 has been a strong one for BTC, with a 59.7% increase. It's worth observing that BTC's gains have started to surpass ETH again, with a 15% gap at the moment.
 

Important Crypto News

BTC purists have advocated for the implementation of a software "spam filter" on the BTC blockchain to block meme coins like Pepe and others. Their argument is that meme coins disrupt BTC's primary use case as a payment method and store of value. However, miners may not mind the increased congestion caused by meme coins, as it generates revenue. It will be interesting to see how this argument develops.

The SEC currently has active lawsuits involving several coins. These coins are either directly targeted or mentioned in the Coinbase and Binance lawsuits. The list includes ADA, ALGO, ATOM, AXS, BNB, BUSD, CHZ, COTI, DASH, FIL, FLOW, ICP, MANA, MATIC, NEAR, NEXO, SAND, SOL, and VGX. It's worth noting that XRP and NEXO have exhibited strength while the rest have experienced substantial declines over the past 30 days. This observation raises questions about what this trend signifies.
 

What Crypto Traders are Saying and Doing

Venture capitalist funding in the crypto sector has significantly declined in the last quarter, reaching its slowest level since 2020, despite numerous rebranding efforts from crypto firms to web3 firms. A substantial portion of these funds has shifted towards AI investments, with NVDA (NVIDIA) being a consistent winner.

Andreessen Horowitz, a prominent venture capital giant that focuses on blockchain, crypto, and Web3, is planning to open its first foreign office in London later this year. They hold a significant stake in Coinbase. The decision to establish an office in London reflects the appeal of the UK's emerging crypto framework. Notably, the UK's Financial Conduct Authority (FCA) has taken a different approach from the SEC, emphasizing providing risk warnings to retail consumers who can then decide whether to proceed with crypto investments.

Crypto derivative volumes are continuing to rise while spot volumes, particularly in the USA, are declining.
 

What Crypto Market Makers are Saying and Doing

Binance.US and Coinbase are facing regulatory challenges from various entities, including bank regulators, the SEC, the CFTC, and state regulators. These regulators seem to be collectively targeting exchanges with the aim of enhancing consumer safety. However, this crackdown on exchanges may result in cutting off US consumers from financial innovations embraced by the rest of the world. The question arises as to who truly benefits from these measures.

Binance.US reached an agreement with the SEC to repatriate assets of US customers in exchange for the SEC not freezing Binance.US assets.

Binance's BUSB token is under scrutiny again in relation to securities regulations and the "Howey test." The SEC argues that the reward program offered by BUSB, which promises interest payments for holding the token, creates an expectation of profit for the token holders and therefore qualifies as a security.

Decentralized exchanges (DEX) like Uniswap have remained unaffected so far. DEX operates solely based on code, making it challenging to hold them legally accountable.

Robinhood is reassessing its crypto offerings following the regulatory crackdown on Binance and Coinbase.

Two South Korean crypto firms, Delio and Haru Investments, have temporarily suspended client withdrawals, citing market volatility and increased confusion. The nature of this confusion is reminiscent of the uncertainties surrounding FTX's ownership of funds.

A freedom of information request revealed that in 2021, stablecoin USDT had billions of dollars in short-term loans to Chinese companies and a significant loan to Celsius Network. These loans contradict the risk-free assets image that USDT claims to uphold. However, Tether insists that its current position is vastly different from two years ago.

What Crypto Business Big and Small are Saying and Doing

Crypto businesses have been targeted en masse by the SEC this month, with Binance and Coinbase being among the high-profile cases.

MakerDAO, one of the largest DeFi protocols, voted to reduce its Gemini USD position by 80%, from $500 million to $110 million. This decrease of $390 million poses a setback for the Winklevoss twins. Liquidity issues and lower yield were cited as the main reasons for this decision. MakerDAO plans to invest the funds in Treasury Bills, securing a +5% yield by staking with the US government.

Ripple achieved a victory against the SEC as a federal judge ruled that documents related to a former official's 2018 speech on crypto and securities cannot be kept confidential in the ongoing lawsuit against the company.

Ledger made a significant error by launching "Ledger Recover," which allowed anyone who lost their recovery passphrase to recover it. This approach meant that Ledger held the key to users' funds, making them vulnerable to state-sponsored hackers worldwide.

Hong Kong is actively establishing itself as a fintech hub, with even the HKMA Central Bank planning to participate in the upcoming Hong Kong Fintech Week on October 30th.
 

What Crypto Regulation Authorities are Saying and Doing

Florida became the first US state to outlaw the use of Central Bank Digital Currencies (CBDCs) issued by international central banks as well as the Federal Reserve.

Switzerland responded to Swiss campaigners by enshrining the right to hold physical cash in the constitution, preemptively safeguarding against the introduction of CBDCs.

Hong Kong has initiated the testing of a digital version of its e-HKD currency and enlisted 16 firms, including HSBC, Bank of China, Alipay, and Visa, to participate in the pilot.

Singapore has indicated that it will not roll out a CBDC at the moment, citing risks associated with its adoption.

Danish authorities ruled out a retail-level CBDC, recognizing that such a digital currency could significantly undermine traditional banks that support the economy through loans.

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