The holiday season gone by brought with it low trading volumes across asset classes, with cryptocurrency volatility remaining especially suppressed. The daily cryptocurrency exchange volume (seven-day average) fell below $10 billion for the first time since 2020.
The dollar crept up on Monday last, marginally fending off its six-month lows against a basket of currencies. The market is unconvinced the Federal Reserve won’t cut rates later in 2023, as a recession is being increasingly priced in, while beliefs are growing that 2022’s aggressive tightening is over.
The euro is one of the most net-long consensus views in macro at the moment, as shown by the CFTC Commitment of Traders report. Gold bugs are closely eyeing this bull run to ascertain if it has legs, as gold and the dollar move up together – typical of a slowing growth and inflation environment.
The Japanese subsidiary of FTX released a statement that it would start refunding customer deposits in February of 2023. The company said that it would develop systems using Liquid Japan, a trading platform that was acquired by FTX earlier in 2022. Customers will need to open Liquid accounts, after which balance checks will precede withdrawals.
FTX Japan forms one of the solvent subsidiaries along with the US and European arms that FTX CEO John Ray is looking to put on sale, following approval from the Delaware courts. In the meantime, Sam Bankman-Fried has pleaded not guilty to criminal charges, setting up a likely dramatic courtroom trial in early October.
An API leak and break-in
The 3Commas trading service, which facilitates automated crypto trading and portfolio management, was the victim of an API leak, where an attacker gained access to approximately 100,000 API keys. API keys, which facilitate the secure connection between exchanges, were accessed and partly released to the public, with traders reporting unauthorised trades on exchanges such as Binance and Coinbase.
Yuriy Sorokin, CEO of 3Commas, confirmed there was an API leak, but claims phishing attacks are partly responsible, and that there is no evidence of an inside job.
The Tennessee-based asset manager Valkyrie announced its proposal to take advantage of the 50 per cent GBTC discount, with hopes of becoming the trust's new sponsor and manager. Steven McGlurg, CIO and co-founder of Valkyrie, has prior experience in closed-end fund takeovers, and aims to meet GBTC redemptions at NAV via a Regulation-M filing, realising the true value of Bitcoin for investors.
Grayscale’s filings, however, indicate that material amendments to the trust need a majority vote from shareholders, though shareholders of the trust have limited voting rights. Grayscale’s Ethereum trust (ETHE) is nearing a record 60 per cent discount as concerns around Digital Currency Group (DCG) are yet to subside. ETHE has fallen 93 per cent from its all time-high in June of 2019.
The smart contract auditing firm Debaub announced it was awarded a bounty after finding a vulnerability in Uniswap’s Universal Router smart contract. Third-party code could have been called during a transfer, which would allow the code to potentially re-enter the router and claim tokens that were temporarily stored in the contract.
Uniswap classified the vulnerability as ‘low severity’, though later investigations revealed it to be high impact with low likelihood. The Universal Router is responsible for allowing users to swap multiple tokens and NFTs in a single transaction.
Debaub advised Uniswap on a solution that would involve adding a re-entrancy lock. Uniswap’s recently launched bug bounty programme earned Debaub $40,000 for this report. Bug bounties have become increasingly common in the blockchain space, with firms such as Immunefi stating they’ve paid more than $60 million in bounties.