Analytics

First Mover Asia: Solana Market Shrugs Off TVL Fakery With Price Rebound; Ether Climbs on Merge Anticipation

Good morning. Here’s what’s happening:Prices: Bitcoin spends most of Thursday above $24K before declining; ether jumps even higher.Insights: SOL gains ground despite a scheme that juiced the value of Saber and the Solana blockchain.Prices

●Bitcoin (BTC): $23,781 −1.0%

●Ether (ETH): $1,860 +0.3%

●S&P 500 daily close: 4,207.27 −0.1%

●Gold: $1,804 per troy ounce +0.5%

●Ten-year Treasury yield daily close: 2.89% +0.1

Bitcoin, ether and gold prices are taken at approximately 4pm New York time. Bitcoin is the CoinDesk Bitcoin Price Index (XBX); Ether is the CoinDesk Ether Price Index (ETX); Gold is the COMEX spot price.

Ether’s Fine DayBy James Rubin

Bitcoin climbed most of Thursday. Ether climbed faster.

The second-largest cryptocurrency by market capitalization continued a two-month surge to crack $1,900 for the first time since late May. Ether was recently trading at about $1,850, about flat over the previous 24 hours as investors continued an early celebration of the Merge, which will shift the Ethereum protocol from a proof-of-work to less energy-sapping, more environmentally friendly proof-of-stake protocol. The token price has jumped more than 85% since dipping below $1,000 in mid-June.

On Wednesday, developers completed the third and final test environment network (testnet) merge. The mainnet Merge is expected to occur sometime at the end of September.

“I’m bullish on Ethereum,” Dan Weiskopf, portfolio manager for Amplify ETFs, told CoinDesk TV’s First Mover program.

Bitcoin

Bitcoin, the largest crypto by market cap, was recently trading at roughly $23,800, down slightly from the previous day but still near the upper end of the roughly $19,000 to $24,000 range its occupied since June. Crypto investors have responded favorably to the latest economic indicators suggesting that the worst of inflation is behind us and the global economy may not plummet into a steep recession.

“People are excited about taking on risk again because it seems as if inflation is under control,” Weiskopf said. “We’ll see if that actually proves out. That bitcoin bottomed and now we’re at $24,000, a lot of people are excited about that.”

Equities

Crypto prices veered from major stock indexes, which were flat a day after gaining enough ground for the tech-heavy Nasdaq to re-enter bullish territory. The Nasdaq, which is still down 18% for the year, fell 0.6%, while the S&P 500, declined 0.1% as investors seemed to discount the latest evidence of waning inflation, a drop in the Producer Price Index (PPI). The 0.5% drop was the first negative turn since April 2020.

Crypto news

The crypto industry’s latest indignities included a report that India regulators were investigating at least 10 crypto exchanges for allegedly assisting foreign firms launder money via crypto. Separately, Canadian bitcoin miner Hut 8 (HUT) posted a C$88.1 million ($69 million) loss for the second quarter, compared with a loss of C$4 million in the same quarter a year ago and withdrew its revenue estimate for next year that it had made in its first-quarter earnings report, saying it was reorganizing parts of its business.

And Coinbase, which has suffered its share of knocks this week including a disappointing second quarter earnings report, saw credit ratings agency S&P Global drop the crypto exchange giant’s long-term issuer credit rating and senior unsecured debt ratings to BB from BB+ and call the company’s outlook “negative.”

S&P Global cited “weak earnings and competitive pressure” in its note.

Biggest Gainers

AssetTickerReturnsDACS Sector
EthereumETH+0.3%Smart Contract Platform

Biggest Losers

AssetTickerReturnsDACS Sector
GalaGALA−6.0%EntertainmentPolkadotDOT−5.3%Smart Contract PlatformTerraLUNA−5.1%Smart Contract Platform

Insights

SOL’s Price ReboundBy Sam ReynoldsDylan and Ian Macalinao built an elaborate network of, in their own words, “protocols that stack on top of each other, such that a dollar could be counted several times” on top of a Solana stablecoin exchange called Saber. They used 11 aliases in their scheme.

At its peak, their double-counting protocols amounted to $7.5 billion in total value locked (TVL) at a time when the TVL of Solana was $10.5 billion. One has to wonder how much of the Solana Summer – last year’s meteoric rise of the protocol – was actually authentic or artificial.

But the market doesn’t seem to care.

Ever since CoinDesk reported that a good proportion of Solana’s TVL was effectively a blockchain version of a Russian nesting doll, Solana’s token is up. SOL is up 15% over the last week and was most recently trading at about $43.

All this comes as the Solana TVL – the actual TVL – has decreased significantly. As a result of CoinDesk’s reporting, decentralized finance (DeFi) data service DeFiLlama switched off its default display of protocols’ double-counted crypto assets.

DeFiLlama “will spend the next few days reviewing all protocols again to check again against double counting,” its founder told CoinDesk.

Right now, Solana’s TVL is $1.94 billion while its double-counted TVL is $2.48 billion. As the year began, on Jan. 1, its double-counted TVL was $11.2 billion while its actual TVL was $8.1 billion.

   

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