The Protocol: Death Cross, Dip Buying and Developer Nerves

As a seasoned observer of the ever-evolving crypto landscape, I find myself intrigued by the flurry of recent fundraising activities and partnership announcements. Let me share my thoughts on some of these developments.

At The Protocol newsletter, our primary focus is blockchain technology, but we rarely delve deeply into crypto market fluctuations. However, a week like this one compels us to do so. The ups and downs in the crypto market have taught founders and developers firsthand how price drops can significantly impact the industry’s overall health. Keep reading for more insights.

ALSO:

Ronin’s latest $12M exploit puts two-year-old “rigorous” security focus under microscope.
Top picks from the past week’s Protocol Village column: Mysticeti, Sui, Polyhedra, Injective, Transak, Succinct.
Nearly $50 million of blockchain project fundraisings: Curio, Andrena, Daylight, Cartridge, Zoth, Khalani, Pichi.
Arthur Hayes unveils Bitcoin Ordinals release “Airheads,” invests in Oyl wallet.

In this week’s edition of our newsletter, The Protocol, we delve into the technical aspects of cryptocurrency, piece by piece. You can subscribe here to receive it directly in your email inbox every Wednesday.

Network News

The Protocol: Death Cross, Dip Buying and Developer Nerves

As an analyst, I’ve been tracking the price movement of Bitcoin, represented by the alternating red and green candles. Notably, it’s currently approaching a point where its 50-day moving average (MA) intersects with the 200-day MA, a phenomenon known as a “death cross.” This potential crossover is visualized in the chart from Omkar Godbole/CoinDesk/TradingView.

DEATH CROSS! Crypto markets suffered one of their worst sell-offs in years, a week-long tumble that took the bitcoin (BTC) price down to $50,000, from $70,000 just last week – darkening the mood across a blockchain industry that until very recently seemed to be approaching ebullient. Despite a slight price rebound on Tuesday and Wednesday, all members of the benchmark CoinDesk 20 index remain deeply in the red over the past week, with ether (ETH) suffering its biggest single-day price drop since May 2021. Alternative.me’s frequently cited “Fear and Greed Index” of crypto-market sentiment swung to “extreme fear” from “greed,” and a dreaded pattern known as the “death cross” is now forming in bitcoin’s price chart, as spotted by CoinDesk’s Omkar Godbole.

At present, it seems like this situation resembles a temporary market fluctuation and is likely to resolve swiftly. However, there’s speculation about potential renewed discussions within the blockchain community – will developers, team members, and fundraisers experience another wave of intense existential anxiety similar to what was prevalent in the industry towards the end of last year?

Last week’s selling in the cryptocurrency market was triggered by several economic and industry-specific factors. These included:

In many instances like this one, there were victors, as well as individuals attempting to profit or offer reassurances during the downturn. Notably, significant Bitcoin holders, referred to as “whales,” increased their cryptocurrency reserves during the market turbulence. On the other hand, smaller investors seemed to be rattled and reduced their positions, according to Krisztian Sandor’s report for CoinDesk, using data from blockchain analytics firm IntoTheBlock. Remarkably, Bitcoin ETFs showed resilience, experiencing only $168 million in net outflows on Monday – a considerably smaller amount than the “couple billion” that Eric Balchunas, senior ETF analyst at Bloomberg Intelligence, anticipated. Intriguingly, Ethereum ETFs even saw net inflows.

The wallet associated with the large-scale hack of the Nomad bridge worth $200 million in 2022 seemed to re-enter the market, spending approximately $40 million on stablecoins to purchase Ethereum at a significantly reduced price, as reported by The Defiant. Tron’s founder, Justin Sun, declared on Twitter that they will establish a fund worth $1 billion to counteract fear, uncertainty, and doubt (FUD). Interestingly, during this event, DeFi platforms continued their operations, successfully managing liquidations of cryptocurrency collateral. Moreover, the lending platform Aave reportedly earned around $6 million in fee revenue.

According to Sean Farrell, a cryptocurrency analyst at FundStrat, published on Tuesday, he was positively impressed by the robust market recovery. However, he advises maintaining some funds in reserve for potential future use within the coming two weeks.

I’ve always been a thrift store enthusiast, constantly scouring for hidden gems among the piles of second-hand clothing. A few years back, I stumbled upon a peculiar T-shirt at Goodwill that caught my eye – and not just because it was only $3.99. The design, though unclear in its original intent, immediately resonated with me as an embodiment of a less conventional investment advice: “Buy the Freaking Dip.”

RONIN RUN-IN: RECENT BRIDGE UPGRADE INCIDENT AND WHITE HAT HACKERS

Elsewhere:

The former CEO of crypto platform Uphold, J.P. Thieriot, is trying to drum up crypto support for Vice President Kamala Harris as she pursues the Democratic nomination in the presidential election, arguing that former President Donald Trump is offering empty promises to the industry.
Trump Sneakers, a website owned by former President Donald Trump that sells themed footwear and perfumes, earlier this week started listing a range of limited-edition sneakers including a Bitcoin-themed, high-top version that costs $499 a pair on pre-order. There are just 1,000 pairs of the bright orange version, and they already sold out.
The shares of bitcoin miner Core Scientific (CORZ) surged as much as 17% on Tuesday, outperforming other crypto-linked stocks, after the company signed an extension of its earlier high-performance computing (HPC) contract with CoreWeave. (According to its website, CoreWeave is a “specialized cloud provider, delivering a massive scale of GPUs on top of the industry’s fastest and most flexible infrastructure.”)

Protocol Village

Highlights from the last week in our Protocol Village section, featuring notable updates and headlines within the realm of blockchain technology.

Diagram showcasing the significant decrease in delay experienced by a blockchain after adopting the Mysticeti-C consensus, which was implemented across 106 separate validator networks (as proposed in the Mysticeti white paper).

The cryptographic protocol known as Mysticeti, which reduces consensus latency to an impressive 390 milliseconds and positions Sui as the quickest consensus layer within the sector, has been activated on the Sui main network following a successful trial on a test network, as reported by the development team.

2. Team Building a Key Blockchain Component Called a “Prover” Launches “Proof Arena”, a platform designed to facilitate fair comparisons among creators of Zero-Knowledge (ZK) proof systems. This new tool will maintain consistency in controllable variables, enabling ZK-proof system developers to evaluate their systems against others in a transparent and scientific manner. Initially, the platform will focus on establishing benchmarks for Polyhedra’s own “Expander”, Polygon’s Plonky3, StarkWare’s Stwo, and Linea’s Gnark. The team plans to eventually support all open-source ZK proof systems and provide benchmarks for common ZK tasks such as Keccak and Poseidon hash verification across various machine configurations, as outlined in the press release.

On Thursday, stakeholders on the Injective blockchain approved the “Altaris Mainnet Upgrade Proposal” (IIP-420), and the upgrade was initiated shortly thereafter, as reported by project updates on social media. When contacted by Protocol Village, the team explained that Altaris represents a significant improvement for traders, stakers, developers, and end-users alike. Key features of Altaris include an advanced RWA Oracle for expanded tokenized services, optimized INJ Burn Auction mechanics, and market enhancements such as the ability for native DEXs to launch perpetual markets. Additionally, Altaris provides Software Development Kits (SDKs) in Python, Go, and TypeScript for developers, enhanced interoperability through IBC hooks, streamlined governance, heightened security for the Injective Bridge, and integration with Ledger wallets.

4. Transak, a company specializing in Web3 payment infrastructure, has officially introduced wire transfers as a new option for U.S. users to buy cryptocurrencies. The team explained that incorporating wire transfers into crypto transactions involves complex procedures, such as managing bank transfers and ensuring precise fund reconciliation. This task is not straightforward and necessitates a sturdy and lengthy development process. Transak has devoted considerable effort in creating a thorough system to guarantee seamless transaction flow, showcasing their dedication to delivering an effortless user experience.

Introducing SP1 1.0: Succinct’s Production-Ready zkVM for Real-Time ZKP Development with Rust

Money Center

Fundraisings

As a seasoned crypto investor with years of experience under my belt, I must say that I was genuinely intrigued when I came across a video walk-through for “Duper,” an innovative game developed by Curio, a renowned blockchain gaming studio, on the Arbitrum One platform. With my deep-rooted interest in both crypto and gaming, this unique blend of technology and entertainment caught my attention immediately. Having dabbled in various blockchain-based games before, I’m eager to explore how “Duper” leverages the power of the Arbitrum One blockchain to enhance user experience and create a more engaging gaming environment. Curio’s video on YouTube has sparked curiosity within me, as I look forward to diving deeper into this exciting new venture.

Curio, a gaming studio building foundation infrastructure serving composable on-chain crypto games, announced it has raised an additional $5.7 million in capital, co-led by Bain Capital Crypto and SevenX Ventures, with participation from OKX Ventures. Concurrently, Curio has released Duper, their flagship strategy game, along with the launch of its first season. According to the project documentation: “The game uses Keystone technology, and the game contract is currently deployed on Arbitrum One.”
Wireless internet provider Andrena has raised $18 million in funding to develop a protocol for decentralized broadband. The protocol, known as DAWN, is a decentralized physical infrastructure network (DePIN), designed to provide homes with internet without having to rely on centralized providers. DAWN is currently operating in a testnet environment ahead of launching on Solana, Andrena announced via email on Wednesday.
Daylight, building a decentralized protocol that will eventually allow users to build “virtual power plants” using “distributed energy resources” (DERs), launched a testnet and announced a $9 million funding round led by the venture capital firm a16z. Framework Ventures and existing investors Lerer Hippeau, Lattice Fund and Escape Velocity also participated.
Cartridge, a developer of provable games and the tooling and infrastructure that powers them, has completed a $7.5 million Series A funding round, led by Bitkraft Ventures with additional participation from Fabric, Dune, StarkWare, Primitive and Ergodic.
Zoth, a DeFi yield infrastructure company, raised $4 million in a strategic round to accelerate the launch of its Tokenized Liquid Note ($ZTLN). According to the team, the fundraising attracted “significant investment from Taisu Ventures, G20, Fat Cat Ventures, GemHead Capital and other prominent companies.”
Blockscout, an open-source block explorer for EVM-based chains, completed a $3M seed round led by 1kx with participation from Primitive Ventures and Gnosis, according to the team.
EXCLUSIVE: Khalani, pioneer of a decentralized solver platform designed to unleash the full potential of intents, raised $2.5M in a seed round led by Ethereal Ventures, with participation from Nascent and Figment Capital. According to the team, angels include Arthur Hayes via Maelstrom, Jan Xie and Nick White.
Pichi Finance, a trustless points trading protocol offering price discovery to tokens pre and post-TGE, completed a $2.5 million seed funding round, led by UOB Venture Management, Signum Capital and Mantle Network.

Deals and grants

As a bitcoin analyst, I recently captured a screenshot of a post made by Arthur Hayes showcasing his contribution to the ‘Airheads’ Bitcoin Ordinals collection. (My screenshot: Arthur Hayes/Airheads)

Arthur Hayes, co-founder of the BitMEX crypto exchange who now serves as chief investment officer of his own private-wealth office, Maelstrom, announced his first NFT collection, Airheads, using the Bitcoin Ordinals protocol, and disclosed an investment in Oyl wallet. According to a blog post by Hayes: “Each Airhead is an inflatable, balloon-like character generated using recursive art to visually represent the size and value of your digital portfolio at the point of mint.
The venture arm of cryptocurrency exchange OKX and the Aptos Foundation, which supports the development of the Aptos protocol, set up a $10 million fund to encourage the growth of the Aptos ecosystem and broader adoption of Web3. The accelerator fund, named Ankaa, will be used to develop projects built on Aptos, according to an emailed announcement. Ankaa will be run by Aptos, OKX Ventures and Alcove, Aptos’ accelerator established last November.

Data and Tokens

Ripple

XRP

Regulatory and Policy

Ethereum Entities Largely Complied With Tornado Cash Sanctions, NY Fed Paper Says
Crypto Industry Tries to Tally Final Wins As U.S. Congressional Primaries Wind Down
Binance Challenges $86M Indian Tax Showcause Notice: Source
SEC Asks NY Court to Deny Coinbase’s ‘Breathtakingly Broad’ Subpoena Request

Calendar

Aug. 6-8: Asia Blockchain Summit, Taipei.

Aug. 7-9: Science of Blockchain Conference, New York.

Aug. 19-21: Web3 Summit, Berlin.

Sept. 1-7: Korea Blockchain Week, Seoul.

Sept. 12-13: Global Blockchain Congress, Southeast Asia Edition, Singapore.

Sept. 18-19: Token2049 Singapore.

Sept. 19-21: Solana Breakpoint, Singapore.

Sept. 25-26: European Blockchain Convention, Barcelona

Sept. 30-Oct. 2: Messari Mainnet, New York.

Oct. 9-11: Permissionless, Salt Lake City.

Oct. 9-10: Bitcoin Amsterdam.

Oct. 10-12: Bitcoin++ mints ecash: Berlin.

Oct. 15-17: Meridian, London.

Oct. 18-19: Pacific Bitcoin Festival, Los Angeles.

Oct. 21-22: Cosmoverse, Dubai.

Oct. 23-24: Cardano Summit, Dubai.

Oct. 25-26: Plan B Forum, Lugano.

Oct. 30-31: Chainlink SmartCon, Hong Kong.

Nov. 10: OP_NEXT Bitcoin scaling conference, Boston.

Nov 12-14: Devcon 7, Bangkok.

Nov. 15-16: Adopting Bitcoin, San Salvador, El Salvador.

Nov. 20-21: North American Blockchain Summit, Dallas.

Feb. 19-20, 2025: ConsensusHK, Hong Kong.

May 14-16: Consensus, Toronto.

May 27-29: Bitcoin 2025, Las Vegas.

2024-08-07 21:18

The Protocol: Death Cross, Dip Buying and Developer Nerves

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