Market Wrap: Bitcoin Climbs Above $21K for First Time in a Week

Hi, I’m Jimmy He, here to take you through the day’s crypto market highlights and news.

Bitcoin (BTC) lifted above $21,000 for the first time in over a week and was up 7.2% over the past 24 hours in Thursday trading.

Most major altcoins also gained with Internet Computer’s ICP and Polygon’s MATIC leading the charts, both up over 10% for the same period. Ether (ETH), the second-largest cryptocurrency by market capitalization after bitcoin, rose 8.3%.

Crypto prices have correlated increasingly to equity markets, which also rose on Thursday, with the tech-focused Nasdaq jumping more than 2% and the S&P 500 and Dow Jones Industrial Average each climbing by more than a percentage point.

Glassnode report: ETH 2.0 stakers underwater

The highly anticipated Ethereum 2.0 upgrade and transition from proof-of-work to proof-of-stake moved a step closer on Wednesday when Ethereum’s Sepolia testnet successfully merged its PoW chain with its PoS chain, becoming the second of three public testnets to run through The Merge.

However, most stakers are “now firmly underwater” because of locked-up ether and price declines, market intelligence firm Glassnode reported.

To become a validator on Ethereum’s Beacon Chain, which launched in December 2020, investors had to deposit 32 ether into an Ethereum 2.0 contract with no withdrawal date.

The total ETH that has been deposited has now reached 12.98 million, with 62% of tokens (8.02 million) deposited before the market’s all-time high of $4,867 in November 2021. Ether has since declined approximately 75% to trade at around $1,240.

“With spot prices currently at $1,060, this means ETH 2.0 stakers are on average holding a loss of -55%,” Glassnode wrote. “If we compare this to the realized price for the entire ETH supply, 2.0 stakers are currently shouldering 36.5% larger losses compared to the general Ethereum market.”

Latest prices

Celsius network pays off loans

After facing liquidity problems and halting customer withdrawals in mid-June, Celsius Network paid off a loan on the decentralized finance (DeFi) platform Maker, allowing the crypto lender to reclaim 21,962 wrapped bitcoins (WBTC), equating to about $440 million.

Celsius’s CEL token momentarily climbed to a high of 92 cents but has since slumped back to around 84 cents, up 0.1% in the last 24 hours. The token is down 81% since the start of 2022.

The loans on decentralized lending platforms such as Maker are generally overcollateralized, meaning the borrower has to put up more assets in value as a backing of the loan than the value of the loan itself. Repaying the loan made sense for Celsius because it attained the valuable collateral by paying back a fraction of its value, Krisztian Sandor reported.

This comes after crypto lender Voyager filed for Chapter 11 bankruptcy on Wednesday, becoming the second high-profile crypto firm to do so in July. As liquidity issues continue to plague crypto companies, lenders are forced to either acquire assets to repay customers or shut down altogether.

Altcoin roundup

• Reddit launches “collectible avatar” marketplace: The social network’s Polygon-based marketplace allows users to purchase blockchain-based profile pictures for a fixed rate. The images can be stored or managed on the company-owned blockchain wallet Vault. Read more here.
• Ethereum scaling system allows ether-to-dollar withdrawals: The scaling system, Immutable X, enables users to sell layer 2-based ether (ETH) and have proceeds deposited directly into their bank accounts. The tool is one of the first layer 2 services to allow users to take out U.S. dollars. Read more here.
• Tornado Cash open sources its interface: The privacy protocol is stepping up transparency by inviting more people to review code. The fully open-source user interface (UI) means any public contributor interested in improving the design can simply review the code and make pull requests through its GitHub. Read more here.

Relevant insight

• Listen ????: Today’s CoinDesk Markets Daily podcast discusses the latest market movements and the end of the easy DeFi yield era.
• Celsius Network Pays Off Maker Loan, Freeing Up $440M of Collateral: The troubled crypto lender paid down the remaining $41 million of its debt on the DeFi platform.
• What’s Your NFT Really Worth? This Man Is Using AI to Find Out: Nikolai Yakovenko has harnessed the power of machine learning for everything from professional baseball to human genomics. Now he’s coming for non-fungible tokens.
• Euro’s Fall Toward $1 Parity: What It Means for Crypto: The 1-to-1 exchange rate may add bearish pressures around bitcoin and inject volatility into euro-pegged stablecoins.
• Crema Finance Attacker Returns Almost $8M, Keeps $1.7M Bounty: The protocol had more than $9 million worth of cryptocurrencies stolen from its platform over the weekend in a flash loan attack.
• SSV DAO to Distribute $10M in Grants for Staking Projects Ahead of Ethereum Merge: The organization will distribute grants in USDC, ETH and SSV tokens.
• TON Foundation Sets Up $90M Ecosystem Fund: The fund’s aim is to establish projects on TON and promote its user as a layer 1 blockchain through advisory services and financial backing.
• Johnson’s Exit as British Prime Minister Leaves UK Crypto Ambitions on Hold: Most likely replacements have been relatively quiet on their Web 3 views.
• Aztec Launches DeFi Privacy Bridge Aztec Connect: The privacy system, now on mainnet, allows users to interact with popular DeFi apps in a private way.
• Argo Blockchain Hires Derivatives Trader to Navigate Market Rout, Sells BTC to Reduce Loan: The miner saw gains in bitcoin production in June, but its profit margin narrowed.
• Binance.US Names Ex-PayPal Executive as New CFO: Jasmine Lee will replace Eric Segal, who had been chief financial officer on an interim basis since October.

Other markets

Sector classifications are provided via the Digital Asset Classification Standard (DACS), developed by CoinDesk Indices to provide a reliable, comprehensive and standardized classification system for digital assets. The CoinDesk 20 is a ranking of the largest digital assets by volume on trusted exchanges.