Around the Block 8/9

Moving into the second week of August, bitcoin (BTC) has continued the trend of outpacing the entire cryptocurrency market, seeing increases of 9% over the past week and briefly eclipsing $12,000 for the first time since early July. This move has coincided with a bearish traditional market — the S&P 500 dipped 6 percent between July 26 and August 5th — which has been shaken by increased trade-war tensions between the U.S. and China. Binance coin (BNB) and monero (XMR) have also seen large gains of 8% and 10% over the same period, respectively. Meanwhile, the majority of significant altcoins have seen either stagnation or slight losses.

Litecoin, in particular, took a hard hit, dropping 13% and below the $85 mark after rising above $100 on August 5th post the halving of its mining reward. In crypto-related news, the state of Rhode Island has taken a stringent stance on cryptocurrency, announcing plans for tight regulation beginning in 2020. The United Nations is pointing to North Korea as the culprit for recent crypto-exchange hacks and claims the country routinely attempts to circumvent international sanctions through crypto-mining operations. A hacker has allegedly hacked the perpetrators of the Binance heist in May of this year, and then, in turn, tried to blackmail Binance by threatening to release customer’s KYC data.

We get into it all, the good and the bad, in this edition of Around the Block.

MAJOR NEWS OF THE WEEK

A hacker has claimed to have hacked the perpetrators of the 7,000 BTC Binance heist in May 2019. In a plot twist to the whole saga, the hacker — under the pseudonym “Bnatov Planton” — claimed their goal was to identify those behind the original attack on the crypto-exchange, and that it was actually made possible by a Binance insider who had created API Key backdoors. Binance, however, alleges that Bnatov Planton attempted to blackmail the exchange in return for keeping customer’s know-your-customer (KYC) data private. While any security issues raise concern, Binance has maintained that the information possessed by the hacker is not genuine.

According to a United Nations report, North Korea has perpetrated dozens of cyber-attacks — many of them on crypto-exchanges. Furthermore, North Korea apparently engages in the mining of several cryptocurrencies to circumvent international sanctions. The stolen cryptocurrencies and proceeds from mining activity — estimated to be around $2 billion — are allegedly used to finance the country’s nuclear and ballistic missile programs.

A new patent filing by Walmart — which already possesses more than 54 blockchain-related patents — indicates a plan to start a rival to Libra. The goals listed in the patent filing include providing financial access for the low-income and under-banked. The filing indicates that the cryptocurrency would be pegged to a fiat currency like the U.S. Dollar.

Beginning January 1st, 2020, businesses within Rhode Island that maintain control of cryptocurrencies or partake in cryptocurrency-related transactions will be subject to the state’s money transmission laws. These new regulations will require, but are not limited to, anti-fraud and anti-money laundering programs, compliance with the Bank Secrecy Act, and disaster-recovery policies. Those who hold cryptocurrencies for personal uses are specifically excluded from the regulations to be implemented. Rhode Island is just the latest state to getting serious about cryptocurrency regulations while federal bodies lag.

Canadian based Bitcoin tech company Blockstream has announced it will begin a bitcoin mining operation, known as “Blockstream Mining”. Motivated by a belief that bitcoin investors and businesses should participate in mining, Blockstream hopes to contribute to the decentralized nature of Bitcoin. With facilities located in both Quebec and Georgia, Blockstream has secured over 300 MW of energy capacity dedicated to mining. According to CSO Samson Mow, at full capacity, Blockstream’s mining capability could reach 8% of the entire Bitcoin network hash rate.

Bitcoin’s volume continues to grow, as Binance (vs. USDT) and Coinbase (vs. USD) saw a healthy month-over-month increase of 16% and 17% respectively. Binance’s monthly bitcoin volume has grown 47% since year-end and is 18% above its prior monthly peak set in December 2018. Coinbase is still 33% underwater from its historic high set in December 2017, when almost 1.1 million BTC exchanged hands. The continued health of spot market volumes for the largest cryptocurrency is a healthy sign of ongoing participation.

Feel free to reach out to us anytime. We are always here to help you learn about, and navigate, the exciting cryptocurrency landscape. If you haven’t already, check out our most recent Crypto Market Commentary, and how to pick the best Crypto Exchange based on an Exchange Ranking Formula.

Blockforce Capital does not recommend that the information presented herein serve as the basis of any investment decision. The information is given in summary form and does not purport to be complete. The sole purpose of this material is to inform, and in no way is intended to be an offer or solicitation to purchase or sell any security, other investment or services, or to attract any funds or deposits.

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Financial innovation at the intersection of capital markets, technology, and digital assets.