Meanwhile, the bitcoin price fell to as low as $15,597, but has since recovered 3.5% to trade at $16,350.
If today’s US CPI inflation figures come in soft then expect a bounce in crypto prices, which means $15k could have been the bottom for bitcoin.
If the reverse is the case and inflation is still heating up, then buying pressure will likely increase drastically.
But stymie any prospect of an end to the turmoil soon is the mounting problems at Sam Bankman-Fried’s FTX exchange.
The Justice Department, the Securities and Exchange Commission and the Commodity Futures Trading Commission are are now investigating FTX and associated trading firm Alameda Research.
FTX Token (FTT) has now lost 88% of its value since the run on its deposits began earlier this week. Its exchange coin is currently trading at $2.63.
SBF on call to investors makes desperate plea for help
According to Bloomberg, on a call to investors prior to Binance walking away from the buyout deal, he reported that the company faced a shortfall of $8 billion and needed $4 billion to remain solvent going concern.
Explaining that he had “f—-ed up”, SBF pleaded for financial support from investors, saying that he would be “incredibly, unbelievably grateful”.
Investors in FTX include the great and the good of the U.S. investment banking and VC world, with names such as BlackRock, SoftBank, Sequoia and Tiger Global Management among its backers – they all face seeing their investments wiped out..
Apparently, SBF was insisting up to an hour before Binance nixed the deal that it was still on, as he sort to persuade investors to pony up cash.
But it was not to be, as CZ made clear on Twitter.
Holders of certain assets on FTX might still find salvation. For example Justin Sun, the founder and CEO of Tron, said the company was standing behind all holders of TRON tokens (TRX, BTT, JST, SUN, HT) on FTX:
As crypto prices crash, which firm will go bust next? Margin calls will be brutal
According to JPMorgan strategists the latest set back for crypto makers could take weeks to work through the system as deleveraging takes place as a result of cascading margin calls.
With one of the supposed white knights of crypto – FTX – laid low, and even Binance deciding to turn the other way on buying parts of FTX, the chances of bailouts rescuing companies that have overextended on their borrowing are vanishing, as the JPMorgan strategists point out:
“What makes this new phase of crypto deleveraging induced by the apparent collapse of Alameda Research and FTX more problematic is that the number of entities with stronger balance sheets able to rescue those with low capital and high leverage is shrinking”
Based on production costs, the JPMorgan team think bitcoin could revisit the $13,000 levels.
Is there a floor for the bitcoin price in the $13,000 region?
Crypto.com the next domino to fall in crypto prices bloodbath?
With crypto prices in free-fall, at this point it is hard to say where the deleveraging could end and which major crypto entity could be the next domino to fall.
FTX and Alameda Research are some of the largest holders of the coin. The price of Solana has crashed 55% in recent days and is trading at $14.06
At uncertain like the present one place of relative calm is new coins that are yet to list on exchanges and offer the possibility of market-beating returns when they do.
To forestall being visited by the same storm that has blown way FTX, Crypto.com will be publishing audited proof of reserves:
Two coins that could inject some alpha into your crypto portfolio
One coin that might fit the bill for outsized returns while other crypto prices fall are Dash 2 Trade, which is a trading analytics and signals platform with an access token in presale called D2T.
The ‘Bloomberg Terminal for traders’ is built by traders for traders and is backed by the team at Learn 2 Trade, which already has a community of 70,000 traders.
D2T has already secured a listing on the LBank exchange after the presale ends. You need to buy early to get the discounted prices, as there is a price ladder with 10 stages. D2T is currently priced at $0.0513.
The other coin interesting coin is RobotEra, which is similar to The Sandbox but instead you build planet worlds using robots.
Its TORA token presale began yesterday and the token is priced at $0.020, but as with D2T there’s a price ladder so early birds can grab a discounted price today. RobotEra is backed by LBank Labs.
The market is currently in a news-driven environment where the prices of cryptocurrencies have been determined by news agenda rather than fundamentals.
Bitfinex analysts have warned crypto investors to be cautious as bitcoin’s (BTC) recovery over the weekend is not a sign that its correction is over; the asset could witness more bloodshed in the near term.
In the latest Bitfinex Alpha report, experts deemed the market’s reaction this week critical, especially as supply alleviated over the weekend could return when traditional markets open.
“No Man’s Land”
Since Saturday, bitcoin has risen almost 10% from $57,600 to $63,000, closing last week in the green. The asset has surged above the 125-day range low of $60,200, which it broke through earlier this month after news of the German government’s massive BTC selling hit the market.
Market sentiment began to improve after reports that wallets linked to the German government were almost empty. However, the positive sentiment may not be sustained for long as the BTC the German authorities moved to trading desks and exchanges are yet to be sold.
While the supply from Germany appears to have been factored into bitcoin’s market price, Bitfinex analysts believe the end of selling pressure depends on how the involved trading desks execute their trades in the coming days.
Although the shift in sentiment underscores the market’s capacity to integrate new information and adjust expectations quickly, analysts think the market’s reaction over the first two trading days of the week cannot be overlooked for two reasons.
First, the low support level in the $60,200 range has now become a potential resistance line. Second, trading patterns over the past three months suggest that weekends are usually favorable for markets, especially on Saturdays when supply pressure seems to subside.
“We are now in no man’s land until we get clear resolution above or below this level,” the analysts said.
A News-Driven Environment
Besides the potential resistance level and three-month weekend trading pattern, the market is currently in a news-driven environment, where the prices of cryptocurrencies have been determined by news agendas rather than fundamentals.
Since selling pressure concerns are not yet completely obsolete due to upcoming Mt Gox creditor distributions, Bitfinex analysts expect such headlines to continue to have some impact on price movements. As such, the analysts urged investors to exercise caution in their trading strategies.
BlackRock’s IBIT led with $117.25 million in inflows on July 15, also being the most traded Bitcoin ETF.
The US spot Bitcoin ETFs recorded a daily net inflow of $301 million on July 15th. This extended their winning streak to seven consecutive days amidst a broader market recovery.
None of the ETFs recorded outflows for the day.
Bitcoin ETFs Rake in $16.11B in Net Inflows Since Jan
According to the data compiled by SoSoValue, BlackRock’s IBIT, the top spot Bitcoin ETF by net asset value, recorded the largest net inflows of the day at $117.25 million. IBIT was also the most actively traded Bitcoin ETF on Monday, with a volume of $1.24 billion. Ark Invest and 21Shares’ ARKB came in close behind with net inflows of $117.19 million.
Fidelity’s FBTC experienced net inflows of $36.15 million on Monday, while Bitwise’s BITB saw $15.24 million in inflows. VanEck’s HODL, Invesco and Galaxy Digital’s BTCO, and Franklin Templeton’s EZBC funds also recorded net inflows. Meanwhile, Grayscale’s GBTC and other ETFs, such as Valkyrie’s BRRR, WisdomTree’s BTCW, and Hashdex’s DEFI, registered no flows for the day.
A total of $2.26 billion was traded on Monday. The trading volume for these ETFs was less than in March when it exceeded $8 billion on some days. Meanwhile, these funds have collectively attracted $16.11 billion in net inflow since their January launch.
What’s Next For Bitcoin?
Earlier this month, bitcoin’s price decline was mainly due to fears of massive selling pressure from Mt. Gox and the German government’s BTC sales.
But the assassination attempt on pro-crypto former US President and presumptive Republican candidate Donald Trump at Saturday’s rally seemed to spark a recovery in the world’s largest digital asset, and experts are bullish on the asset’s price trajectory going forward. Bitcoin surged more than 9% over the past week and was currently trading slightly below $64,000.
Veteran trader Peter Brandt discussed bitcoin’s price outlook, suggesting a potential major rally. He referred to a pattern he terms “Hump->Slump->Bump->Dump->Pump” and highlighted that the July 5 double top attempt was a bear trap, confirmed by the July 13 close. He sees a likely continued upward trend but warned that a close below $56,000 would negate this bullish view.
“Bitcoin $BTC could be unfolding its often-repeated Hump…Slump…Bump…Dump…Pump chart construction. Jul 5 attempt at the double top was a bear trap, confirmed by Jul 13 close. Most likely scenario now is that bears are trapped. Close below $56k negates this interpretation”
PeckShield alert reveals LI.FI’s protocol vulnerability is similar to a March 2022 attack, with the same bug recurring.
The decentralized finance (DeFi) platform LI.FI protocol has suffered an exploit amounting to over $8 million.
Cyvers Alerts reported detecting suspicious transactions within the LI.FI cross-chain transaction aggregator.
LI.FI Issues Warning After $8 Million Exploit
LI.FI confirmed the breach in a statement on July 16 via X: “Please do not interact with any http://LI.FI powered applications for now! We’re investigating a potential exploit.” The team clarified that users who did not set infinite approval are not at risk, emphasizing that only those who manually set infinite approvals seem to be affected.
According to Cyvers Alerts, more than $8 million in user funds have been stolen, with the majority being stablecoins. According to on-chain data, the hacker’s wallet holds 1,715 Ether (ETH) valued at $5.8 million and USDC, USDT, and DAI stablecoins.
Cyvers Alerts advised users to revoke relevant authorizations immediately, noting that the attacker is actively converting USDC and USDT into ETH.
Crypto security firm Decurity provided insights into the exploit, stating that it involves the LI.FI bridge. “The root cause is a possibility of an arbitrary call with user-controlled data via depositToGasZipERC20() in GasZipFacet, which was deployed 5 days ago,” Decurity explained on X.
“In general, the risks behind routers, cross-chain swaps, etc. are about token approvals. Raw native assets like (unwrapped) ETH are safe from these kinds of hacks b/c they don’t have approvals as an option. Most users & wallets also no longer do “infinite approvals” which gives a smart contract total control on removing any amount of their tokens. It’s important to understand which tokens you’re approving to which contracts.
This dashboard looks for all transactions of a user that intersects Lifi. Not all of these transactions indicate risk- but you can see how, broadly, integrations & layers of tech (like how Metamask bridge uses Lifi on BSC) can complicate how users do or don’t put their assets at risk. Revoke Cash is the most well known approval manager app.
But it’s also good security practice to simply rotate your address. New addresses start with 0 approvals, so starting fresh by moving your tokens to a fresh address is another good security practice.” – commented Carlos Mercado, Data Scientist at Flipside Crypto.
Recent Exploit Mirrors March 2022 Attack
Further analysis by PeckShield alert revealed that the vulnerability is similar to a previous attack on LI.FI’s protocol that occurred on March 20, 2022. That incident saw a bad actor exploit LI.FI’s smart contract, specifically the swapping feature, before bridging.
The attacker manipulated the system to call token contracts directly within their contract’s context, making users who had given infinite approval vulnerable. This exploit resulted in the theft of approximately 205 ETH from 29 wallets, affecting tokens such as USDC, MATIC, RPL, GNO, USDT, MVI, AUDIO, AAVE, JRT, and DAI.
“The bug is basically the same. Are we learning anything from the past lesson(s)?” PeckShield Alert said in a July 16 X post.
Following the 2022 incident, LI.FI disabled all swap methods in its smart contract and worked on developing a fix to prevent future vulnerabilities. However, the recurrence of a similar exploit raises concerns about the platform’s security measures and whether adequate steps were taken to address the vulnerabilities identified in the previous breach.
LI.FI is a liquidity aggregation protocol that allows users to trade across various blockchains, venues, and bridges.
