The likelihood of a Bitcoin price correction descending to $22,000 is growing, driven by emerging bearish signals within BTC derivatives.
Examining the Bitcoin price chart underscores a decline in investor sentiment, attributed to Grayscale’s legal triumph against the SEC on August 29 and subsequent delays in spot BTC exchange-traded fund (ETF) applications.
Crucially, the question at hand is whether the potential for an ETF can outweigh escalating risks.
By August 18, the entire 19% post-BlackRock ETF filing rally had reversed, with Bitcoin regressing to $26,000.
Efforts to reclaim the $28,000 support faltered as optimism for an ETF approval rose following Grayscale’s favorable Bitcoin trust request.
Cryptocurrency investor morale waned as the S&P 500 closed at 4,515 on September 1, only 6.3% below its January 2022 peak.
Similarly, gold, unable to surpass $2,000 since mid-May, sits 6.5% from its all-time high, dampening Bitcoin investor sentiment months ahead of the 2024 halving.
Analysts attribute Bitcoin’s lackluster performance to regulatory actions against Binance and Coinbase, alongside speculation of a potential U.S. Department of Justice indictment against Binance for money laundering and sanctions breaches.
According to Pentoshi, potential gains from a spot ETF approval eclipse the price impact of regulatory actions against exchanges.
Yet, this analysis disregards decreased U.S. inflation (3.2% in July 2023 from 9.1% in June 2022) and the Federal Reserve’s liquidity reduction, unfavorable to Bitcoin’s inflation protection thesis.
Though Bitcoin clings to $25,000 since mid-March, derivatives data suggests testing bulls’ conviction.
Typically, Bitcoin monthly futures trade slightly above spot markets, indicating sellers demand more to delay settlement.
Presently, a 3.5% futures premium is the lowest since mid-June, pre-BlackRock’s ETF filing, revealing reduced demand for leverage buyers via derivatives.
Options markets also offer insights into investor optimism post-correction.
A bearish tone emerges, with protective put options trading at a 9% premium on September 4, contrasting similar call options.
The increasing bearish momentum in Bitcoin derivatives data, coupled with potential spot ETF approval delays until 2024 due to SEC concerns, tips the regulatory landscape in favor of bears.
The looming uncertainty surrounding potential DOJ actions and ongoing SEC lawsuits against exchanges exacerbates the situation.
In conclusion, considering the inability to sustain a positive price momentum despite elevated odds of a spot Bitcoin ETF approval, a retracement to $22,000 appears probable.
This echoes the price level observed when Bitcoin’s futures premium was 3.5%.
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A recent development in the legal saga surrounding former Celsius CEO Alex Mashinsky has seen a federal judge issue an order to freeze specific bank accounts and properties associated with him, following a motion from the United States Justice Department.
This judicial decision, dated September 5 and emanating from the U.S. District Court for the Southern District of New York, has approved the unsealing of a restraining order pertaining to Mashinsky’s assets.
Under this order, the Justice Department has been granted the authority to freeze accounts held under the names of various holding companies at Goldman Sachs and Merrill Lynch, in addition to accounts registered under Mashinsky’s own name at First Republic Securities, SoFi Bank, and SoFi Securities.
Notably, the order extends to include a property owned by Alex Mashinsky and his wife, Kristine, situated in Austin, Texas.
The Mashinskys acquired this residence in 2021, and it had been on the market for over a year, a period coinciding with Celsius’s filing for bankruptcy in July 2022.
This Austin property has garnered attention as it is being sold by Alex Mashinsky, the co-founder and former CEO of the cryptocurrency lending platform, Celsius, which declared bankruptcy.
Mashinsky cited his resignation in September 2022, asserting that his role had become a significant distraction, particularly amidst the backdrop of Celsius users grappling with “difficult financial circumstances.”
Even prior to this development, Celsius had been under scrutiny by both state and federal authorities for purportedly offering unregistered securities.
The legal entanglements intensified in July when U.S. authorities arrested Mashinsky, alleging that he had deceived Celsius investors and defrauded users of substantial sums.
Mashinsky pleaded not guilty to all charges and was subsequently released on $40 million bail, with certain restrictions such as electronic monitoring and stringent financial transaction controls in place.
In a parallel legal course, the U.S. Commodity Futures Trading Commission and the Securities and Exchange Commission initiated civil cases against Mashinsky in July, ultimately reaching settlements with Celsius amidst the backdrop of the former CEO facing criminal and civil charges.
Furthermore, the Federal Trade Commission imposed substantial fines amounting to $4.7 billion on Celsius for alleged misconduct in “duping” its users.
However, these penalties were temporarily suspended to facilitate the use of assets in the context of Celsius’s ongoing bankruptcy proceedings.
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Legal Industry Rakes in Over $700 Million from Cryptocurrency Bankruptcies
The legal sector has capitalized on the downfall of cryptocurrency giants like FTX and Celsius, reaping substantial gains totaling hundreds of millions of dollars in fees.
Professionals such as lawyers, accountants, consultants, and analysts have collectively earned at least $700 million through their involvement in the bankruptcy proceedings of prominent crypto companies over the past year.
This lucrative trend is detailed in a report by The New York Times, which analyzed the financial outcomes of the crypto bankruptcies.
The sum encompasses expenses incurred during the resolution of five major crypto firms’ bankruptcy cases: FTX, Celsius Network, Voyager Digital, BlockFi, and Genesis Global.
This assessment covers the period from July 5, 2022, to July 31, 2023, with an expectation of further escalation as pending cases unfold, including the impending trial of Sam Bankman Fried scheduled for October.
The most substantial beneficiaries in the realm of cryptocurrency bankruptcy are the legal experts tied to the FTX case, amassing a significant sum of $326 million. Notably, the law firm Sullivan & Cromwell, overseeing FTX’s bankruptcy, has been at the forefront, charging a remarkable $110 million in legal fees and an additional $500,000 in expenses.
The complex nature of cryptocurrency regulations, or the lack thereof, has played a pivotal role in driving up costs.
Andrew Dietderich acknowledged that the intricacies of crypto regulations have led to a protracted and multifaceted legal landscape, contributing to higher fees.
Kirkland & Ellis, entrusted with handling bankruptcies for Celsius, Genesis, and Voyager, have accounted for $101 million in billed fees and $2.5 million in expenses.
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Additionally, Alvarez & Marsal, specializing in turnaround management, has reportedly invoiced over $125 million for their involvement in FTX, Celsius, and Genesis cases.
Initial reports in January 2023 indicated the substantial financial gains anticipated for firms like Sullivan & Cromwell engaged in crypto bankruptcy proceedings.
The firm allocated an extensive workforce of over 150 professionals to the FTX case, including 30 partners charging rates surpassing $2,000 per hour.
Acknowledging concerns over exorbitant legal fees, Katherine Stadler was appointed by the United States bankruptcy court to oversee fee examination for the FTX case.
In June, Stadler confirmed that the fees requested by the FTX team, which exceeded $200 million since the November bankruptcy, were justifiable.
Continuing the legal saga, Sam “SBF” Bankman-Fried’s legal team is actively opposing the United States Department of Justice, seeking to counter recent requests by the authority.
These requests encompass an appeal to exclude all seven of SBF’s expert witnesses from testifying in court, a move that could potentially cost up to $1,200 per hour for these witnesses.
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Japan’s primary financial regulator, the Financial Services Agency (FSA), has taken a proactive stance on crypto regulation, proposing alterations to the tax code governing digital assets.
The FSA’s request, submitted on August 31, aims to revise the taxation framework in a bid to stimulate the growth of domestic firms in the crypto sector.
The most significant recommendation within the FSA’s comprehensive 16-page proposal is the exemption of domestic companies from the “unrealized gains” tax on cryptocurrencies that is currently applicable at the end of each fiscal year.
While some nations only levy taxes when crypto assets are exchanged for fiat currency, Japan imposes yearly taxes on these digital holdings.
Crucially, the proposed amendment enjoys potential acceptance prospects, with the FSA highlighting that the Ministry of Economy, Trade and Industry has already provided its backing to the suggested changes.
The FSA’s rationale for these regulatory adjustments, as outlined in its official statement, revolves around enhancing the ecosystem for the advancement of Web3 technologies.
The proposed changes aim to foster an environment conducive to blockchain-based business startups.
The crypto industry’s proponents within Japan have long been advocating for a recalibration of the national tax structure concerning digital assets.
The Japan Blockchain Association (JBA), an independent entity separate from the government, recently submitted a set of three key requests aimed at reshaping the regulatory landscape for cryptocurrencies.
Among these requests, the foremost is the elimination of the year-end unrealized gains tax imposed on corporations holding crypto assets.
Additionally, the JBA has proposed transitioning from the prevailing tax structure, which taxes individual crypto trading profits, to a system of separate self-assessment taxation, with a standardized tax rate of 20%.
Furthermore, the JBA seeks to eradicate income tax on profits resulting from the exchange of crypto assets by individuals.
Japan’s financial landscape appears to be adapting to the evolving digital asset sector, as regulatory entities like the FSA and advocacy groups such as the JBA actively collaborate to ensure a favorable environment for blockchain innovation and entrepreneurial endeavors.
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OKX, a prominent cryptocurrency exchange, is on the cusp of securing a virtual asset service provider license (VASP) in Hong Kong, marking a significant stride towards formal approval.
The exchange anticipates the green light for its VASP license by March 2024.
Li Zhikai, the Global Chief Commercial Officer of OKX, conveyed in an interview that the exchange is actively engrossed in conversations with banks, eagerly awaiting the issuance of the license to initiate operations.
The preparatory groundwork, including technology integration, has already commenced.
Hong Kong, having embraced a pro-crypto stance in 2023, unveiled a regulatory framework to enable crypto exchanges to cater to retail customers.
While a slew of over 80 cryptocurrency firms initially demonstrated interest in establishing a presence within the nation, only a handful, notably HashKey and OSL, successfully procured the requisite licenses to commence retail crypto trading services.
On August 28, HashKey effectively launched retail crypto trading services for Hong Kong users.
To mitigate risks associated with nascent crypto tokens, the regulatory body exclusively sanctioned Bitcoin and Ether trading for retail customers.
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Additionally, regulatory guidelines enforced a 30% cap on investments, limiting individuals to allocate no more than one-third of their net income.
In tandem with HashKey and OSL, Huobi and Gate.io have also submitted applications for retail crypto trading services, awaiting regulatory endorsement.
A representative from Gate.io previously divulged that the Hong Kong Securities and Futures Commission imposes rigorous prerequisites on virtual asset service providers, emphasizing the necessity of insurance and compensation arrangements for client safeguarding.
Moreover, the regulator mandates crypto exchanges to maintain a substantial 98% of assets in cold wallet storage.
Inquiries made to OKX by Cointelegraph for insights into their regulatory journey and prospects in the Hong Kong retail market yielded no immediate response.
The unfolding developments underscore the cryptocurrency landscape’s growing convergence with traditional financial systems and the pursuit of responsible and secure trading environments.
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Binance, a prominent cryptocurrency exchange, is facing a series of executive departures amidst mounting regulatory scrutiny from global authorities.
Mayur Kamat, the Head of Product at Binance, has officially confirmed his departure from the crypto exchange after a tenure of almost two years.
Kamat revealed his decision, stating, “The time has come for me to step down and transition product leadership to the next generation of leaders at Binance.
I’ve worked closely with the product teams to ensure a smooth transition,” as conveyed to Cointelegraph on September 4th.
Kamat, who had previously held positions at renowned companies such as Google and Agoda, expressed that this juncture is personally opportune for him to take a break, following two decades of continuous involvement in product-related endeavors.
He expressed gratitude for his time at Binance and for witnessing the exponential growth of the user base.
Kamat conveyed his appreciation to Changpeng Zhao (CZ) and the entire leadership for the remarkable opportunity and mentioned that he will continue to support Binance from a distance.
Before joining Binance as the Head of Product in January 2022, Kamat had been a Product Manager at Google and Agoda.
During his tenure at Binance, he led global product and design teams, playing a pivotal role in the expansion of the user base from 80 million to over 150 million within just 18 months.
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Kamat is recognized as an early advocate of Bitcoin (BTC), having acquired his first two Bitcoins in 2011, a mere two years after Bitcoin’s launch.
He clarified that the acquisition was driven by the need to purchase a VPN connection rather than for investment purposes.
This recent departure follows a series of resignations from Binance, including key figures such as Patrick Hillmann, the Chief Strategy Officer, who cited personal reasons for his exit.
However, market observers speculate that the departure could be linked to the United States Department of Justice’s investigation into Binance.
Other notable departures include Han Ng, the General Counsel, and Steven Christie, the Senior Vice President for Compliance, who left Binance in early July.
The evolving landscape at Binance reflects the challenges posed by regulatory inquiries, causing changes within the executive ranks.
The departure of Mayur Kamat adds to the list of high-profile exits and underscores the heightened scrutiny faced by Binance on the global stage.
This dynamic situation continues to shape the future trajectory of the cryptocurrency exchange.
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Sam Bankman-Fried, the founder and former CEO of the now-defunct cryptocurrency exchange FTX, has submitted a memorandum on September 1st, urging the court to reject the in limine requests put forth by the United States Department of Justice (DOJ).
Drafted by SBF’s attorney Mark Cohen, the memorandum asserts that the DOJ’s requests are not only unfounded but also overly broad.
Cohen contends that several of the issues raised by the government are not appropriate for consideration at the current stage of the proceedings.
Furthermore, he highlights that the requests seek to introduce irrelevant and prejudicial evidence related to uncharged or past conduct.
This tactic is perceived as an attempt to weaken potential defense strategies and to admit a wide array of hearsay and other inappropriate evidence.
The memorandum goes on to assert that the prosecutor’s requests lack legal support and are practically unworkable, rendering them unfit for approval.
This memorandum follows a series of recent filings by the DOJ, wherein they requested the court’s intervention in multiple aspects of the case.
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On August 28th, the government motioned to disallow all of SBF’s proposed expert witnesses from testifying during the trial.
The DOJ argued that these experts and their accompanying disclosures were plagued by various shortcomings, warranting their exclusion from the proceedings.
A day later, on August 29th, the prosecutor submitted yet another motion, describing SBF’s defense against fraud allegations as “irrelevant” in its present state.
They requested additional disclosures to supplement the already planned defense strategy.
Concurrently, SBF’s legal team has been advocating for his temporary release, asserting that the provided accommodations are inadequate for adequately preparing for the trial scheduled for October.
Additionally, they are in the process of appealing the court’s decision to revoke SBF’s bail, a determination made on August 11th.
The defense argues that the bail revocation was an act of “retaliation” in response to SBF’s exercise of his First Amendment rights.
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Binance CEO Changpeng “CZ” Zhao envisions a future where decentralized finance (DeFi) surpasses centralized finance (CeFi) during the upcoming bull market.
Speaking on a live X Spaces event (formerly Twitter Spaces) on September 1, CZ expressed his optimism about DeFi’s trajectory.
He emphasized that an increasingly decentralized industry would be beneficial and indicated that DeFi’s trading volumes, currently comprising 5% to 10% of CeFi volumes, could soon eclipse CeFi:
“Crypto’s future lies in DeFi; with its volume accounting for a significant portion of CeFi trading, the forthcoming bull run could potentially elevate DeFi beyond CeFi.”
In early June, following legal actions against centralized exchanges Coinbase and Binance by the U.S. Securities and Exchange Commission (SEC), the trading volume on the top three decentralized exchanges (DEXs) surged by 444% within 48 hours.
At present, DEXs exhibit a combined 24-hour trading volume of $722,776,226.
CZ also praised the recent dismissal of a lawsuit against decentralized protocol Uniswap. He found the outcome to be reasonable, logical, and positive.
On August 30, a U.S. federal court rejected a class-action lawsuit against Uniswap, highlighting that regulatory uncertainty impacts investor protection.
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The case centered on plaintiffs’ claims of losses due to scam tokens on the decentralized exchange.
During the event, a participant recalled a judge’s ruling that developers cannot be held accountable for misuse of DeFi platforms, a stance deemed favorable for DeFi builders. CZ concurred, asserting that code written by developers is a form of free speech and emphasized the significance of developer support.
Recent data suggests a shift in venture capital investments from CeFi to DeFi projects. A March 1 CoinGecko report revealed that investment firms directed $2.7 billion towards DeFi initiatives in 2022, marking a 190% increase from 2021.
Concurrently, investments in CeFi projects declined by 73% to $4.3 billion during the same period.
This trend potentially indicates DeFi’s emergence as the new high-growth domain within the crypto sector, while the waning investments in CeFi could be attributed to saturation.
Changpeng Zhao’s outlook on DeFi’s potential dominance in the forthcoming bull market resonates with the ongoing shifts in the crypto landscape, with decentralized finance poised to redefine the industry’s dynamics.
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Bitcoin (BTC) closed the week below the $26,000 mark on Sep. 3, despite a dismissive stance on overly pessimistic trader sentiment by analysts.
Data derived from Cointelegraph Markets Pro and TradingView revealed that BTC exhibited minimal volatility over the weekend, maintaining a narrow range of $200.
The lack of definitive direction led to a feeling of déjà vu among market participants, reminiscent of the behavior observed during the previous month’s August closing.
The effects of two major volatility-inducing events from the previous week, involving Grayscale, a crypto asset manager, and regulators in the United States, were wiped clean from the charts. Consequently, traders evaluated the potential implications of different levels of weekly closure.
Prominent trader Skew offered insight into the market structure by highlighting the absence of a candle body closure below the Higher Low (HL) established in June, or below the $25.9K mark.
He stressed the significance of this point, suggesting that a 1-week closure below and subsequent price resistance in this range could lead to a downward move towards the prior 1-week resistance at approximately $24.3K.
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Looking ahead, Skew presented a “bearish scenario” that could bring about levels below $20,000.
Conversely, he expressed skepticism regarding a bullish revival that would involve reclaiming the $26,000 level and maintaining a higher low into the fourth quarter of the year.
Summarizing the events of the previous week, Keith Alan, co-founder of Material Indicators, advised against making definitive judgments on Bitcoin’s bullish or bearish nature.
He acknowledged the recent volatility resulting from Grayscale’s legal victory over the SEC and the SEC’s decision to delay judgment on the first U.S. Bitcoin spot price exchange-traded funds (ETFs).
Alan contended that despite these external events, the fundamental structure of the Bitcoin market remained unaltered.
He emphasized that neither a confirmed breakout nor a breakdown had occurred from a technical perspective, citing $24,750 as the crucial support zone to monitor.
A chart accompanying his analysis depicted the BTC/USD order book on Binance, showing increased buy liquidity just below the spot price at the $24,750 zone of interest.
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Decentralized finance (DeFi) has revolutionized the financial landscape, offering an array of innovative services challenging traditional finance (TradFi).
However, the main stumbling block to widespread DeFi adoption remains the user experience.
The DeFi sector has long sought an entry point to onboard new users effectively.
A potential solution to this issue lies in the realm of fintech.
By creating a financial technology app that caters to both TradFi and DeFi users, it becomes possible to showcase the advantages of self-custody—where users safeguard their digital assets without relying on intermediaries like banks.
While the self-custody movement gained momentum, the Web3 space introduced hybrid services that merge elements of centralized and decentralized finance.
Changex, an all-in-one mobile wallet, embraces this approach through its CeDeFi model, providing users from traditional services a familiar environment.
Changex’s app facilitates non-custodial crypto trading, empowering users to retain control of their crypto assets.
It supports buying, selling, and transferring crypto, even enabling debit card and bank transfer purchases.
Multiple blockchains, including Ethereum, Polygon, and Binance Smart Chain, are seamlessly integrated into the exchange.
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For DeFi enthusiasts, Changex offers a range of alternative financial practices such as staking, with plans to introduce lending and stablecoin interest features.
The platform’s native token, CHANGE, provides additional APR on staking rewards.
The app is also making strides in bridging the gap between traditional finance and the crypto world.
It plans to issue European Union-regulated IBANs for fiat asset management, facilitating cross-border transactions within the EU.
Moreover, the upcoming Changex Visa Debit Card promises cashback benefits and the ability to spend staked assets without affecting APR.
Changex’s selection by Cointelegraph Accelerator underscores its expertise, boasting a team of over 20 members, a Bulgaria office, and a track record of delivering robust financial solutions.
With an average of 25,000 monthly active users and nearly $3 million in staked assets, the platform has gained strong traction.
The roadmap ahead includes the integration of the Avalanche blockchain, accompanied by Avalanche-based staking pools.
Additionally, Changex plans to introduce a unique leveraged staking feature.
The forthcoming Changex Visa Debit Card and IBAN, scheduled for Q4 2023, represents a major update.
This release aims to provide users complete control over their finances, solidifying Changex as a comprehensive one-stop solution for both crypto and fiat needs.
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