Cryptocurrency Confidence Returns: Bitcoin Hits $59,000

MetaversePlanet September 4, 2024Last Updated: September 4, 2024

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As of today, Bitcoin is trading at $59,088, while the leading altcoin, Ethereum, is priced at $2,511. The total cryptocurrency market capitalization now stands at $2.06 trillion. Bitcoin’s market cap has reached $1.17 trillion, while Ethereum’s market cap is valued at $303 billion.

This update is brought to you by the CoinTR Research Department, highlighting key developments in the cryptocurrency industry.

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Arthur Hayes, Fed rate cuts cause Bitcoin He explained that it didn’t help

Arthur Hayes, Co-Founder and Former CEO of BitMEX, Shares Insights on the Fed’s Rate Cuts and Bitcoin Prices

Arthur Hayes, co-founder and former CEO of the exchange BitMEX, recently shared his theory on how the U.S. Federal Reserve’s rate cuts may influence Bitcoin prices—and why they might not have the expected impact. In a post on September 2, Hayes discussed Fed Chair Jerome Powell’s August 23 speech at Jackson Hole, where Powell confirmed that a rate cut would occur in September. Despite this confirmation, Bitcoin prices have been on the decline.

Following Powell’s speech, Bitcoin briefly surged to $64,000, but by September 2, it had dropped to $57,400, marking a 10% decline. Currently, the price has slightly recovered to $59,238. Hayes pointed to reverse repo agreements as a key factor in this situation. These agreements involve the sale of securities with the promise to repurchase them at a higher price on a specified date, currently offering a 5.3% interest rate. This rate is higher than the 4.38% return on short-term government bonds, prompting major money market funds to withdraw cash from government bonds and place it into reverse repos, thereby reducing the liquidity available for riskier assets like cryptocurrencies.

Hayes also noted that since the Fed announced its intent to raise interest rates in September, an additional $120 billion has been funneled into reverse repos. This situation contradicts the typical expectation that lower interest rates would benefit high-risk assets like Bitcoin. Generally, low interest rates encourage borrowing and spending, creating more market liquidity. In contrast, a weakening interest in safe investments could make the dollar less attractive and potentially strengthen Bitcoin.

According to the CME FedWatch Tool, there is a 69% probability of a 25-basis-point rate cut and a 31% probability of a 50-basis-point cut at the Fed’s September 18 meeting. A larger rate cut would signal a more aggressive stance from the Fed, potentially triggering a stronger market reaction and increased economic activity.

In August, DeFi protocols’ monthly fees increased by 24% Fell.

In August, decentralized finance (DeFi) protocols saw a significant decline in monthly fees, dropping by 24.4% compared to July, marking the lowest level since February. According to data from The Block, DeFi protocols generated $288.38 million in August, down from $381.45 million in July. Lido led the way with the highest fees, earning $76.18 million, followed by Uniswap, Jito, and PancakeSwap.

Overall, DeFi revenue also saw a decrease of 19.7%, falling to $59.53 million—the lowest since February. Independent researcher Nick Ruck commented that the decline in yields from DeFi protocols has led investors to shift their focus toward memecoins.

During the same period, Bitcoin miners’ revenue also fell by 10.5%, reaching $851.36 million. This decline has been attributed to various factors, including uncertainties in the crypto sector and the upcoming U.S. elections. JPMorgan also revised its price targets for Bitcoin miners, citing the falling Bitcoin price and the rising network hash rate as key reasons for the adjustment.

Hacker attacks in August Crypto losses from incurred exceeded $313 million

In August, cryptocurrency hackers stole $313.86 million across more than 10 cyberattacks. According to blockchain security firm PeckShield, 93.5% of those losses—amounting to $293.4 million—were caused by phishing attacks alone. Two of the five largest attacks in August resulted in significant losses, including $238 million in Bitcoin and $55.4 million in Dai through phishing schemes.

Other notable incidents in August include the Ronin Network’s 12th anniversary, which, despite a successful million-dollar recovery, still experienced unauthorized transactions leading to $5.1 million in losses. Additionally, Nexera suffered a $1.83 million loss due to a smart contract vulnerability.

Cyberattacks remain a significant concern for the cryptocurrency industry. According to a report published by Immunefi on August 29, by 2024, the crypto industry had already lost $1.21 billion to hacking and fraud incidents. In July, India’s WazirX crypto exchange was hit by one of the largest cyberattacks of 2024, losing $234.9 million from a multisig wallet. The exchange is currently restructuring its financial operations and has initiated legal proceedings in Singapore as part of this process.

In response to the growing threat of financial losses due to hacks, a team of ethical hackers has come together to strengthen defenses and prevent breaches. This anti-hack response team, known as SEAL, is led by Paradigm researcher and white-hat hacker Samczsun. Since its inception in August 2023, SEAL has received over 900 hacking reports. According to Immunefi’s report on August 22, nearly 80% of cryptocurrencies fail to recover their value after a hack or vulnerability, often causing more damage to projects than the security breach itself.