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The price of Bitcoin has ranged between $29,500 and $32,000 since late June as investors await a potential upside breakout after multiple institutional spot ETF applications. However, one analyst claimed approval of BlackRock’s filing “is a long shot.”

The world’s largest cryptocurrency dipped below the $30,000 mark on Friday — falling 1.2% to $29,876.12 at 9:00 a.m. EDT, according to CoinGecko.

Bitcoin research lead at CoinShares, Chris Bendiksen, sees a trifecta of challenges causing the digital asset’s current stagnation. 

BlackRock’s spot Bitcoin ETF filing

The first challenge noted by the analyst was buyer exhaustion. “There has been buyer exhaustion after the rally caused by BlackRock’s spot Bitcoin ETF filing,” Bendiksen told The Block.

BlackRock’s June 15 filing sparked a Bitcoin rally where the digital asset surged above $30,000. BTC has stagnated at that level for the past month. “However, while Blackrock has made some amendments to their filings and Coinbase has partnered with CBOE for a surveillance-sharing agreement, we still think a spot ETF approval is still a bit of a long shot,” he added.

He highlighted how the U.S. Securities and Exchange Commission has repeatedly said they want surveillance agreements with markets carrying a “significant” amount of bitcoin volume. The analyst outlined this as an obstacle to spot ETF approval. “We don’t know what “significant” exactly means, but the majority of bitcoin spot volume is on exchanges outside of the U.S., where the SEC can have little hope of oversight,” he added.

However, the analyst said public comments by Larry Fink, BlackRock’s CEO, have lent considerable momentum to Bitcoin. “Having Larry Fink sit on the major financial news networks talking positively about Bitcoin is beneficial in and of itself,” Bendiksen asserted. He added the lead-up to the Bitcoin halving will draw substantial media attention and “reiterate the strength of Bitcoin’s rock-hard monetary policy.”

Potential DOJ action against Binance

Bendiksen said the second challenge to Bitcoin breaking out of its current range was U.S. authorities turning their attention to Binance. “The overhang from a potential DOJ action against Binance is causing stagnation,” Bendisen said.

In early June, two U.S. lawmakers — senators Elizabeth Warren and Chris Van Hollen — alleged in a letter that Binance may have lied about Binance.US being an independent entity. Bloomberg reported the letter to U.S. Attorney General Merrick Garland alleged the crypto exchange may have made false statements.

The request to the U.S. Department of Justice came after the SEC filed a suit against Binance and its CEO Changpeng Zhao. The SEC filing alleged Binance had listed unregistered securities, commingled customer and company funds, and that Zhao was “secretly” controlling Binance.US.

Rotation into alts after XRP ruling 

Bendiksen said the third challenge to Bitcoin’s upward trajectory is the “recent rotation into altcoins after the XRP summary judgement.”

Following Ripple’s partial legal victory against the SEC, Bitcoin’s market dominance fell below 50%. The decline in dominance came as altcoins took more ground from the digital assets market share.

After the Ripple ruling, XRP jumped 73% to become the fourth-largest crypto asset. Other altcoins — like Ethereum, Cardano, Solana, Polygon, and Stellar — also saw double-digit growth.

Macroeconomic outlook

Traders are cautiously eyeing the upcoming Federal Reserve meeting and an anticipated interest rate hike, potentially the last of the cycle. The tech-heavy Nasdaq suffered a 2% drop on Friday, down 294.71 points, its most significant drop since March. The dollar, on the other hand, has been performing well. At the start of the week, the U.S. Dollar Index DXY was trading around last week’s lows. However, in the last two days, the DXY has reversed higher, crossing the 100.00 point mark.

Traditionally, Bitcoin shares an inverse correlation with the US Dollar Index (DXY). “We think that weakness in the dollar over time should have a positive effect on the bitcoin price, but it might take more time for that effect to be visible from under the shorter-term ebbs and flows of the market,” Bendiksen said. 

© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Side Labs, the startup behind the interconnected liquidity provider Side Protocol, raised $1.5 million in pre-seed funding.

The funding was done through a simple agreement for future tokens sale, in which the token’s valuation totaled $30 million, the firm’s co-founder Shane Qiu told The Block. Participants include Hashkey Capital, KR1, Continue Capital, Symbolic Capital, Informal Systems, Dora Ventures, Charles Lu, Harry Halpin, Eric Chen, Mirza Uddin, Siddhartha Dutta and Vincent Niu. 

Side Labs intends to use the fundraise to expand its team and guarantee adherence to legal and compliance standards while building out the Mesh Liquidity Network, which aims to eliminate bridges and intermediary tokens for cross-blockchain asset exchange through a network of liquidity hubs. 

Mesh liquidity

Within the next month, Qui said that Side Labs intends to launch a private testnet with a select group of members of the firm’s backers and community members, in addition to building out a public testnet that explores user rewards, mesh liquidity, staking and governance and other features. Within six month, the firm aims to launch the first version of its mainnet followed by a V2 testnet introducing zero-knowledge technology. Finally, Side Lab intends to launch its V2 mainnet with ZK technology to give L1 and L2 protocols mesh liquidity within the next year.

“Mesh liquidity represents a natural progression in the evolution of inter-chain asset exchange,” Qiu said.

Qui previously worked as a research at Binance Labs, the venture capital arm of the crypto exchange giant Coinbase. 

© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Ethereum Layer 2 optimistic rollup scaling solution Optimism is moving forward with two proposals to add zero-knowledge proofs. The move aims to enable secure and efficient cross-chain communication between layers and directly between OP chains.

“We’re excited to share that we will be moving forward with the proposals from O(1) Labs and RISC Zero,” Optimism Foundation General Manager Bobby Dresser posted on Optimism’s Github on Thursday.

Zk-proofs are a cryptographic concept where one party (the prover) can prove to another party (the verifier) that they know a value or the truth of a statement without revealing any information beyond the fact that they know it — enhancing privacy and security in blockchain transactions.

The zk-proof proposals

Both proposals, put forward by O(1) Labs and RISC Zero, promise to revamp Optimism’s tech stack and bring zk-proof capabilities to the platform.

Zk-proof infrastructure and tooling company RISC Zero suggested upgrading Optimism’s existing fault protocol to use zero-knowledge proof to ensure the correctness of state changes on Optimism, reducing the time to achieve finality. If anyone wishes to make a state change final, they can provide a zero-knowledge proof showing the change is correct. Similarly, if someone wants to challenge an incorrect state change, they can provide a proof of the correct state, the proposal stated.

Web3-focussed firm O(1) Labs, which incubated the Mina Protocol, proposes creating a new fault-proof solution using Kimchi — a zk-proof system currently used in Mina Protocol — to prove the correct execution of transactions efficiently. These proofs are then used to update the Ethereum network’s state via smart contracts. The plan promises improved performance, robust security and compatibility with existing systems while managing complexity and keeping latency low, according to the submission.

The original request for proposal issued on Optimism’s Github in May sought to enhance the protocol’s cross-chain communication capabilities by integrating zk-proofs, with a baseline grant for each submission of 250,000 OP tokens ($380,000). The goals were to bolster security, decrease latency and make the platform more affordable and efficient.

The Optimism Foundation is reaching out to O(1) Labs and RISC Zero directly to “kick off the project and discuss expectations in more detail,” Dresser added.

Last month, Optimism changed its name to OP Mainnet, aligning with its “superchain” vision.

© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Episode 67 of Season 5 of The Scoop was recorded with The Block’s Frank Chaparro, and a16z crypto’s Global Head of Policy Brian Quintenz

Listen below, and subscribe to The Scoop on Youtube, Apple, Spotify, Google Podcasts, Stitcher, or wherever you listen to podcasts. Please send feedback and revision requests to podcast@theblock.co.

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Brian Quintenz is the Global Head of Policy at a16z crypto and a former commissioner at the U.S. Commodity Futures Trading Commission.

In this episode, Quintenz explains how the SEC’s failure to issue updated guidance for the crypto industry has created a legislative opportunity for clarity.

According to Quintenz, “Congress needs to show the way by creating the framework that the SEC is refusing to contemplate.”

Outline:

0:36 Policy & regulation overview

2:43 Securities v. commodities

06:37 Registered securities

11:58 Special Purpose Broker-Dealers

14:49 a16z’s policy uutlook

18:34 Ponzi schemes

21:31 CeFi regulation

27:16 Lummis x Gillibrand’s crypto bill

30:30 Token decentralization

32:32 Legislative hurdles

© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

DeFi protocol Conic Finance suffered an exploit today by a hacker who managed to make off with 1700 ether (over $3.2 million), according to security analysts at BlockSec. Conic is a DeFi protocol designed to allocate funds across the Curve decentralized exchange using the liquidity pools it operates.

The unidentified attacker exploited a reentrancy vulnerability, which subsequently allowed the manipulation of a faulty price oracle that Conic relied on. This enabled them to drain funds, said Matthew Jiang, the director of security services at BlockSec, in an interview with The Block.

Such an attack leverages the ability to repeatedly call a function within a single transaction before the initial function call completes. This mechanism lets the attacker withdraw more funds than they’re entitled to.

In the incident around 6:35 am ET today, the hacker executed a flash loan, borrowing 20,000 staked ether, as evidenced by on-chain data. These funds were routed to Conic so its price oracle, which is sourced from a third-party “read-only” smart contract, could be tampered with — facilitating the reentrancy attack — BlockSec explained. “The flash-loaned stETH was utilized to amplify the profit,” Jiang said.

Keeping its community informed, Conic announced in a Twitter post that the team was “investigating an exploit involving the ETH Omnipool” and promised to share further updates.

© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

The fast food giant is celebrating the 40th anniversary of the menu item with a perplexing new Web3 activation.

Some selling pressure may have arisen from a revised U.S. bill that excludes a host of traditional securities from the “digital asset” category, which some say bodes ill for DeFi.

Developers in Nigeria and across Africa can build and test their decentralized applications on the Optimism forked Mara Chain.

Unlocks that free up large amount of liquidity relative to average daily trading volume yield a deeper decline in the token’s price within two weeks after the event, research by The Tie shows.