gm friends —

Time for your mid-week crypto update! As always, a lot has happened. Check it out and let me know your thoughts down in the comments!

News Stories

Markets & Macro

• Fed minutes point to ‘likely’ rate cut coming September [CNBC] Federal Reserve officials are increasingly leaning towards a rate cut in September, citing progress on inflation and concerns over labor market conditions. While July's meeting held rates steady, the sentiment for easing is growing stronger, with markets fully pricing in the first cut since the Covid crisis as economic data continues to evolve.

• BlackRock’s ETHA Becomes First Ethereum ETF to Cross $1B in Net Inflows [CNBC] BlackRock's iShares Ethereum Trust (ETHA) has achieved a significant milestone, becoming the first Ethereum ETF to surpass $1 billion in net inflows. With over $860 million in net assets, ETHA leads the pack, outpacing its competitors by a wide margin and underscoring strong institutional interest in Ethereum-based products.

• Tron surpasses Ethereum and Solana in daily revenue with SunPump craze [Crypto Slate] Tron recently surpassed both Ethereum and Solana with $3.84 million in daily earnings, largely driven by the SunPump memecoin generator. Early investors are seeing substantial gains, with one trader netting $20 million in unrealized profits from the SUNDOG token.

• Bernstein notes growing investor interest in bitcoin miners pivoting to AI [The Block] Bernstein analysts report rising investor interest in Bitcoin miners shifting to AI and high-performance computing (HPC) data centers, a strategy dubbed the "Mullet" approach. While the pivot could leverage miners' existing power capacities, the report highlights significant challenges, noting that Bitcoin mining and AI data centers have vastly different business models, suggesting miners may be better off focusing on expanding their Bitcoin hash rate instead.

• Surge In Derivative Bets Leaves Bitcoin "Ripe For A Short Squeeze" As ETF Inflows Accelerate [Zerohedge] Bitcoin's derivatives market is setting the stage for a potential short squeeze, with negative funding rates and a spike in open interest signaling aggressive shorting. K33 analysts warn that traders betting on further declines could be caught off guard, especially as Bitcoin ETFs continue to see strong inflows, boosting bullish sentiment. With key trading metrics flashing positive, a short squeeze could trigger a rapid price rebound if market conditions align.

Institutions, Regulation, & Politics

• SEC talks with ETF issuers over concerns of Solana being a security preceded Cboe removing 19b-4s: Sources [The Block] The SEC's concerns about Solana potentially being classified as a security led to the removal of 19b-4 filings for Solana ETFs from the Cboe website, stalling their approval process. While issuers like 21Shares and VanEck argue that Solana is more akin to a commodity, the SEC's stance has dampened hopes for Solana ETF approval under the current administration, with some experts suggesting a potential delay until 2025.

• With the Democratic National Convention kicking off today, the party's newly released platform doesn't mention crypto [The Block] The Democratic Party's newly released platform notably omits any mention of cryptocurrency, a stark contrast to the Republican stance, which pledges to defend crypto rights. With President Biden out of the race, there's growing pressure within the party to address crypto issues, highlighted by recent efforts from figures like Mark Cuban and Chuck Schumer to promote balanced crypto regulation ahead of the November election

• Coin Center Wins Right to Sue U.S. Treasury, IRS Again Over Controversial Tax Reporting Rule [Coindesk] Coin Center has been granted another opportunity to challenge a 2021 amendment to tax code 6050I, which mandates the disclosure of personal details for certain crypto transactions. The U.S. Court of Appeals overturned a previous dismissal, allowing Coin Center to pursue its claims that the rule violates constitutional rights, including the First and Fourth Amendments. The case now returns to a lower court for further proceedings.

• Bitwise has acquired ETC Group, the London-based digital asset manager and creator of Europe’s largest physical Bitcoin ETP (BTCE) [Bitwise] Bitwise has acquired London-based ETC Group, adding $1 billion in assets under management (AUM) to its portfolio, bringing its total AUM to over $4.5 billion. This move marks Bitwise's expansion into the European market, where it plans to grow ETC Group's existing exchange-traded products (ETPs), including physical Bitcoin and staked Ether offerings.

• CZ and Binance face new lawsuit for alleged laundering of stolen crypto [CoinTelegraph] Binance and its former CEO, Changpeng "CZ" Zhao, are facing a new class-action lawsuit from investors who claim the exchange enabled money laundering of stolen crypto. The lawsuit alleges that Binance played a crucial role in making the stolen assets untraceable, violating the RICO Act. Legal experts suggest the case could have significant implications for blockchain analytics and asset recovery if it proceeds to trial, putting Binance in a difficult position as it continues to face regulatory scrutiny.

Crypto Products & Onchain Events

• McDonald’s Instagram Hacked and Promotes Solana Coin [The Block] McDonald's Instagram account was hacked to promote a Solana-based memecoin called GRIMACE, which briefly surged to a $20 million market cap before crashing. The incident is part of a broader trend of volatility in Solana's memecoin market, with the hacked account falsely claiming a $700,000 Solana theft as part of a "McDonald's experiment."

• Story raises $80M at $2.25B valuation to build a blockchain for the business of content IP in the age of AI [TechCrunch] Story, a startup aiming to create a blockchain-based platform for tracking and monetizing intellectual property (IP) in the AI era, has raised $80 million, bringing its valuation to $2.25 billion. Backed by a16z and Polychain Capital, Story plans to empower creators to control and profit from their IP as AI continues to disrupt traditional content models. The platform, set for launch later this year, has already attracted over 200 teams in its closed beta, positioning itself as a key player in the evolving digital IP landscape.

• USDT Expands to Aptos [The Block] Tether has launched its USDT stablecoin on the Aptos blockchain, aiming to provide lower-cost transactions compared to networks like Ethereum. Aptos, a Layer 1 blockchain founded by former Meta engineers, is designed for scalable and user-friendly decentralized applications. This expansion follows Tether's strategy of broadening USDT's reach, though the majority of its supply remains concentrated on Tron and Ethereum.

• Aave V3 Launches on ZKsync [Aave] Aave, DeFi’s largest lending platform, has launched its V3 iteration on ZKsync Era, an Ethereum Layer 2 network powered by zero-knowledge technology. This move enhances ZKsync's DeFi ecosystem, offering new liquidity and yield opportunities while ensuring privacy and scalability. The launch includes support for major assets like USDC and WETH, and Aave's integration with ZKsync is expected to attract institutional interest and expand the DeFi user base.

• Optimism Foundation disables permissionless fraud proofs, plans hard fork following security audits [The Block] The Optimism Foundation has disabled its permissionless fraud proofs just two months after their launch, reverting to a permissioned system due to security vulnerabilities identified in community-driven audits. While no user assets were at risk, the move is a precautionary measure. Optimism now plans a network upgrade, including a hard fork scheduled for September 10, to address these issues and enhance security. The upgrade, dubbed "Granite," is considered low-risk by OP Labs despite not undergoing an external audit.

This is all for today’s Mid-Week Crypto Updates news stories! Let me know in the comments how you liked it and what you’d like to see in the future!

Bonus: Hyperliquid Vault Opportunity

Author: The Grand Tonto

Folks, I want to pass along some info about a cool crypto product built on a hyperliquid vault that one of my Discord friends, 0xGengar has created. The specifics of this are a little out of my depth of understanding, but it seems interesting and professionally done, and he has a history of creating profitable similar vaults. 

Specifically, he’s developed a strategy that leverages long positions in major, established cryptocurrencies while shorting high Fully Diluted Valuation (FDV), low float tokens with poor fundamentals, significant venture capital (VC) unlocks, and low adoption or usage metrics.

The goal is to achieve superior risk-adjusted returns by capitalizing on market inefficiencies and fundamental imbalances.

This is not financial advice, and you should do your own research!!!! And as I spoke about last week, it's not something that fits my capabilities / temperament / strategies, but wanted to pass this along because 0xGengar is one of the smartest crypto people I follow!

Check it out at: https://cipherquant.com/

Thanks for reading!

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