Crypto Pulls Back Again, but Spot Bitcoin ETFs Rebound Ahead of Spot Ether ETF Launch

Takeaways

• Crypto prices declined up to 7.5% to kick off week: The dip came as investors registered $150 million in liquidations, and the German government began unloading bitcoin it seized from a piracy site in 2013.
• Defunct bitcoin exchange Mt. Gox will start distributing repayments in bitcoin and bitcoin cash in July: The upcoming move marks significant progress in compensating creditors following its 2014 collapse. But it's also stoking fears about more selling pressure on bitcoin.
• Coinbase sues SEC, FDIC: The largest crypto exchange in the US is seeking more information about whether the SEC and FDIC made a concerted effort to hurt the crypto industry.
• Tether ceased USDT minting on EOS and Algorand but will continue redemptions for the next 12 months: The company said it was reallocating resources to enhance security and efficiency on other blockchains.
• US spot bitcoin ETFs received $31M in net inflows Tuesday after seven straight days of outflows: Meanwhile, the launch of spot ether ETFs could come as soon as next week, with one analyst expecting up to $15 billion in inflows over the next 18 months.
• A MakerDAO governance delegate fell victim to a phishing scam, losing $11M in tokens: The scam was the latest example of phishing in the crypto sector.

Major Coins Plunge at Start of Week Amid $150M in Liquidations

Cryptocurrency markets faced a sharp downturn on Monday, with major tokens experiencing declines up to 7.5%. The price of bitcoin dropped below $60,000, after investors liquidated over $150 million over the weekend.

As a result of the declines, long positions, which bet on bitcoin to go higher, registered $150 million in liquidations. Spot bitcoin ETFs also saw outflows of nearly $175 million Monday as investors digested the news of bitcoin’s price dip. The price of bitcoin subsequently bounced back mid-week, approaching $62,000 as of 2:30 pm ET Thursday.

The latest pullback in crypto prices comes as bitcoin miners face continuous selling pressure after their rewards were cut by 50% in the latest halving event. Additionally, the German government last week began selling bitcoin it seized from a piracy site 11 years ago, with plans to unload tens of millions of bitcoin (about 50,000 bitcoin) to various exchanges. The strength of the dollar index has also reportedly put pressure on bitcoin prices.

Mt. Gox To Begin Repayments in Bitcoin and Bitcoin Cash in July

In July, defunct bitcoin exchange Mt. Gox will begin distributing some $9 billion worth of repayments in bitcoin and bitcoin cash, according to a notice from Rehabilitation Trustee Nobuaki Kobayashi. The announcement marks a significant step in the long process of compensating creditors following the exchange's collapse. But it has also stoked fears that it could prompt a sell-off that will cause crypto prices to tumble.

The repayments will be made in accordance with the rehabilitation plan, and the process will start with cryptocurrency exchanges that have completed the necessary information exchanges and confirmations.

Founded in 2010, Mt. Gox became the largest bitcoin exchange before a security breach in 2014 resulted in the loss of 850,000 bitcoin. In September 2023, it was announced that creditors would be reimbursed with 142,000 bitcoin, 143,000 bitcoin cash and $432 million in cash, no later than October of this year.

Earlier updates indicated that the trustee's rehabilitation claims system was adjusted to reflect the amounts of bitcoin and bitcoin cash to be repaid, with an April completion date for the repayment process. The news comes after Mt. Gox moved $2.9 billion worth of bitcoin for the first time in five years in May.

Coinbase Sues SEC, FDIC

Crypto exchange Coinbase filed a lawsuit against the SEC and FDIC on Thursday, alleging both failed to comply with Freedom of Information Act requests from Coinbase that sought to unearth more information about aggressive crypto enforcement policies.

Coinbase has long contended that the SEC has not enforced securities laws consistently and the FDIC has discouraged banks from working with crypto exchanges The exchange is hoping to unearth new information that shows a concerted effort to cripple the crypto industry altogether, specifically through SEC investigations into Ethereum 2.0 and others. Coinbase previously made FOIA requests in 2023 but the requests were subsequently blocked.

The SEC previously sued Coinbase in 2023, alleging that Coinbase was an unregistered securities exchange.

Tether Ends USDT Minting on EOS and Algorand

Tether has announced the halting of USDT minting on the EOS and Algorand blockchains, effective Tuesday. While new USDT tokens will no longer be created on these platforms, users will still be able to redeem USDT on EOS and Algorand for the next 12 months. Tether will review the situation and may make further announcements after this period.

The company emphasized that this transition will be carried out with minimal disruption, ensuring a smooth experience for users. In their official announcement, Tether highlighted their ongoing assessment of transport layers to balance maintainability, usage, and community interest.

"Our aim is to allocate resources in ways that maximize security and efficiency while fostering innovation…" Tether said in an official announcement on their website. Despite the removal of support for Algorand and EOS, Tether remains by far the largest stablecoin by market cap and continues to issue USDT on multiple major blockchains, including Avalanche, Celo, Cosmos, Ethereum, Polkadot, Solana, and Tron.

Bitcoin ETFs See Net Inflows as Spot Ether ETFs Near Launch

On Tuesday, US spot bitcoin ETFs returned to net inflows, accumulating $31 million after seven days of net outflows. Fidelity’s FBTC led the inflows with $49M, followed by Bitwise’s BITB at $15 million, and VanEck’s HODL with $4 million.

Grayscale’s GBTC, however, experienced net outflows of $30.3 million, in addition to Ark Invest and 21 Shares' ARKB which both saw roughly $6 million in outflows. Despite a daily trade volume of $1.1B, BlackRock’s IBIT reported no net flows, as did funds from Invesco, Galaxy Digital, Valkyrie, and Franklin Templeton.

Meanwhile, preparations for launching spot ether ETFs are underway following recent soft approval from the Securities and Exchange Commission. Firms filed amended S-1 registration statements last week, and some industry analysts have predicted that spot ether ETFs could launch as soon as next week. It’s unclear how these ETFs will perform, but the CIO of crypto index fund manager Bitwise has claimed investors will produce $15 billion in net inflows in the first 18 months.

MakerDAO Delegate Loses $11M in Phishing Attack

In a phishing scam early on Monday morning, a MakerDAO governance delegate lost $11 million worth of Aave Ethereum Maker (aEthMKR) and Pendle USDe tokens. This incident, detected by Scam Sniffer in the early hours of June 23, involved the delegate unknowingly signing multiple malicious transactions.

The compromised delegate, who plays a key role in the MakerDAO system by voting on governance proposals, polls, and executive votes, fell victim to the scam.

The phishing incident was identified when an address transferred 3,657 aEthMKR tokens to another, with the transaction completing in just 11 seconds. The event underscores the continuing threat of phishing scams in the crypto industry. According to industry analysts, phishing scams drained $300 million from 320,000 users in 2023 alone.

-Team Gemini