We know why ETH is up

Good morning! Welcome to The Daily Moon. There’s trouble in the crypto world again. Thai crypto exchange Zipmex has paused withdrawals, blaming a “combination of circumstances”. Rumour has it that it’s exposed to Babel which is close to a default. Zipmex CEO has denied all allegations of financial troubles.

It was a high for the markets, with Bitcoin breaching $23,000 and Ethereum speeding past $1,600. Nasdaq was flat in early trade. Back home, Sensex and Nifty gained for the fourth day in a row.

Merge Driving The Surge

Don’t go by Ethereum. The ~48% rally in Ethereum prices over the past seven days is because of the Merge. The complicated upgrade to the second-largest crypto has led to a bull run. Altcoins latched on to the positive sentiments, and have seen a double-digit price rise.

It’s probably temporary The date of Ethereum’s proof-of-stake (PoS) move isn’t official yet but developers are expecting the shift by September 19. Goerli will be the last testnet merge before the complete transition. The price surge is a direct consequence of this shift.

FYI: Ethereum is moving from proof of work to PoS. PoW needs high-power computers to solve maths problems for crypto mining. PoS involves staking crypto to validate a transaction.

Altcoins are rising Eyeing the Merge momentum, Solana, Polygon, and Cardono rose too. These altcoins are called “Ethereum killers” because their features are similar to ETH; but offer lower costs.

Despite the PoS move, transaction prices on Ethereum are not expected to fall. That's where these altcoins will gain.

Between July 13-20, Cardano rose ~25% and Solana was up ~40%. ETH scaling platform Polygon was the biggest winner, with a rise of over 65% in the past one week.

Winter’s not over yetExperts aren’t too bullish on this rally. Recession fears in the US could dampen the crypto hike cycle. There are interest rate hike worries too. Let’s also not forget the SEC’s calls for tighter crypto regulation. The bull run could just be short lived.

Safekeepers Are In Queue

BNP Paribas wants to safeguard your crypto. The banking giant will offer crypto custody services with Metaco. Just a few weeks ago, Societe Generale entered this space too.

What’s crypto custody?You deposit cash in a bank to keep it safe. The same happens with crypto as well. While regular crypto wallets are secure, there’s always a risk. That’s where crypto custodians come into the picture. The custodian:

1. Holds large crypto assets securely.

2. Is insured against large risks such as thefts and hacks.

Typically, institutional investors with large crypto assets prefer to avail of custodian services because they deal in millions. A fixed percentage of the total assets is the annual fee.

Why is it hot?This year has been a rough year with crypto hacks causing losses above $1 billion. Getting a third party with an added layer of security helps bridge the loopholes.

Institutions, or entities investing more than $10 million, make up ~45% of crypto trading. With a crypto market cap of ~$ 1.07 trillion, this is big business for BNP Paribas, Citibank, and the likes.

Crypto Unicorns Are Coming

There is no crypto winter for the right ones. Over 1/3rd of the 6,472 startups in Asia Pacific are involved in crypto. A report said that five of these startups are potential unicorns, meaning they could be valued at over $1 billion.

There’s more potential Digital assets, metaverse, and web3 are the top focus sectors in APAC. The report listed China-based Conflux network and Memsonics, Singapore-based Stader Labs, Hong Kong-based Catheon Gaming, and Taiwan’s Maicoin as budding unicorns. Among the emerging sectors, NFT and DeFi took the top two spots.

Shift to fintech APAC, led by China, is the biggest fintech adopter. Here, there is a shift towards crypto. While China has banned it, other Asian markets such as Hong Kong and Singapore have led the crypto growth. Blockchain too is growing, led by the popularity of Sky Mavis’ Axie Infinity.

Who’s Paying For Them Rules?

Global regulators are keen on controlling crypto, more than ever. Under watch 24/7, 365 days, crypto companies have turned to their trusted lobbyists. Naturally, there are big bucks involved.

Show me the moneyWith a finger on the pulse of Washington D.C, crypto lobbyists are the new publicists. Here are some stats:

1. With Meta, Robinhood, and Gemini as its clients, Sternhall Group made $350,000 of its $1.2 million Q1 income from crypto lobbying.

2. Conaway Graves Group, which counts FTX, Ripple and ADAM as its clients, earned 33% of its $180,000 income in Q1 from crypto lobbying.

3. Franklin Square earned $200,000 from crypto. Clients include Coinbase, Algorand, and OpenSea.

With crypto regulations in the draft stage, you know what’s guiding lawmaker’s hands.

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