Crypto summer lull is in effect

Same old challenges for the crypto market

GM, frens! Ambire here with out weekly newsletter. Today we’ll talk about the annual summer lull in the crypto market, SEC suing HEX founder, Ethereum network activity growing at a steady pace, CZ and his plans for new algorithmic stablecoins, along with Binance’s biggest market apparently being China despite the crypto ban, Ambire’s latest podcast episode, and analysts finding a link between the Bald memecoin rugpull and SBF’s Alameda. Let’s get down to it:

Liquidity drought: same old challenges for the crypto market

In addition to traditional markets, the crypto sector has also experienced a slowdown in volumes this year.

With the exception of a brief rally in May and early June, BTC and alts have suffered from consistent depletion in liquidity. This decline is reflected not only by trading activity but also by on-chain transaction numbers - with daily average transfer volume currently lower than it has been since August 2020.

The situation is not unique to the crypto market - other asset classes have similarly seen a drop in liquidity over the past few months due to the summer lull.

The reason for this could be attributed to a combination of the increased scrutiny from regulators, as well as historically low volatility across asset classes. Both of these factors have conspired to create an atmosphere of caution that investors are unwilling or unable to break out of.

The lack of liquidity is making it much harder for traders and investors alike to enter and exit positions in a timely manner, leading to a rise in spreads and slippage. This is further exacerbated by the fact that crypto markets are often illiquid in comparison to traditional ones; even when volumes are rising, it takes longer for liquidity to build up.

Another reason is the summer - people are finally going outside, taking vacations, and spending less time behind the computer screens. This has led to fewer participants actively trading on the market, leading to lower liquidity.

In other words, the crypto market is currently caught in a liquidity Catch-22. Regulators are increasingly imposing stricter requirements, and investors are more reticent to enter positions, which is a noose that the industry has yet to escape.

The only way to break free from this cycle is for investors and institutions to take on more risk, as well as develop better infrastructure and tools for traders. This will help bring back liquidity into the market, allowing traders to enter and exit positions quickly without suffering unnecessary losses due to slippage.

Talking about better infrastructure, Ambire is committed to providing the best of it. Our platform allows you to perform transactions with reduced gas fees. Find out about 6 ways Ambire can help you save on gas fees here.

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SEC sues HEX founder

The SEC has recently filed a lawsuit against Richard Heart, the founder of altcoin Hex. According to the complaint in the U.S. District Court for the Southern District of New York on Monday, Heart allegedly raised over $100 million from investors through an unregistered and fraudulent securities offering.

The SEC also claims that he used some of these funds to purchase a $25 million black diamond known as “The Enigma.” According to them, Heart also marketed Hex as a better alternative to Bitcoin and other cryptocurrencies claiming that it is designed for 10,000x returns.

Whether he really did that or not - the effect of this lawsuit on the crypto market has been a cause for concern. The price of Hex plunged sharply after the news of the lawsuit, which is something the investors won't be happy about.

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Ethereum's network activity continues growing

Ethereum's network usage is up: the number of active addresses and total network growth are both rising.

July saw a positive trend in Ethereum's underlying metric indicators, with the daily active addresses (DAA) and network growth increasing steadily. DAA tracks the number of unique users engaging in transaction activity on Ethereum, while network growth measures how many new users are joining the blockchain each day.

This is a positive sign that more and more people are relying on Ethereum to power their businesses, secure their transactions, and build the decentralized future. As these numbers rise, so does the level of trust in Ethereum - and its potential to become an integral part of the new digital economy.

The DAA on the Ethereum network now stands at 400,000, a two-week high. This indicates that there are plenty of traders who are currently interested in ETH.

At the same time, more than 80,000 new addresses are being created every day - suggesting a healthy trend of adoption and growth for the coin.

A strong network and user base are essential components of a crypto project's success. As such, Ethereum's current metrics could be an indication that the coin is on track for further growth in terms of adoption and, as a result, price.

It remains to be seen how Ethereum's metrics and the crypto markets will develop over the coming days, but it looks like ETH is in an interesting spot. With more users joining and more trust in its underlying technology, Ethereum could be set for a strong performance this summer.

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CZ reveals plans for algorithmic stablecoins

CZ is no stranger to taking risks and making bold statements. During one of the Twitter AMAs, he expressed his plans for introducing smaller algorithmic stablecoins that will provide investors with an alternative to the existing dominant stablecoin giants in the market.

He believes they can offer greater transparency than their larger counterparts and potentially provide higher returns.

Despite the risks associated with such a venture (especially to the regular holders), CZ is confident in his team's ability to maximize the use of their current resources and technology. He also believes that with some innovation, his proposed stablecoins could be more secure and reliable than existing stablecoins such as Tether and even his own Binance USD (BUSD).

Even given the current climate of regulatory uncertainty, it would be understandable if CZ and his team would rather be cautious about their plans. But given his ambition, we can for sure expect to hear more from him on this project in the near future.

At the same time, Wall Street Journal recently reported that Binance users in China traded about US$90 billion worth of crypto in May, keeping the country as the exchange’s largest market despite China’s ban on crypto.

Apparently, the exchange helped users in China bypass restrictions by directing them to various websites with Chinese domains before rerouting them to the platform.

Well, at the very least, it will be interesting to see how CZ and his team will manage to maneuver around the restrictions and regulations in China when launching their algorithmic coins, too.

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Latest Web3 on Fire podcast episode is out

In this week’s episode of Ambire’s Web3 on Fire podcast, host Rob Edwards and his guest Meg Lister, Product Lead at Gitcoin, delve into the world of Gitcoin and DeFi, exploring the future of decentralized work, the power of Quadratic Funding, and the potential of DeFi to reshape finance. Check it out:

Don’t forget to follow the Web3 on Fire Twitter account, dedicated to the newsletter and podcast - so you don’t miss any news from Web3!

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Analysts found connections between BALD rugpull and Alameda

The aftermath of the Bald memecoin rug pull has caused a stir in the crypto sphere, but some on-chain analysts out there have taken the time to examine the events leading up to this moment. In particular, it has been pointed out that a connection may exist between Alameda Research (Sam Bankman-Fried's / FTX Market Maker) and the smart contract address used to create the Bald memecoin on Base network.

Igor Igamberdiev, an on-chain analyst and head of research at Wintermute, conducted extensive research into the Bald memecoin incident and discovered that there was a direct link between the address of the deployer who created the smart contract and an older wallet (0x000f7f). This connection was first established by noting that both wallets shared the same deposit account on FTX Exchange. Moreover, the research revealed that Alameda had interacted directly with the 0x000f7f wallet even before June 2021.

Igamberdiev also noted that this wallet exhibited considerable activity on various platforms between 2019-2020. This indicates that the owner was an individual who had both a high degree of technical expertise and capital.

While these facts alone do not prove beyond any doubt that Alameda was responsible for creating the Bald memecoin, they do suggest a strong link between its developer and Sam Bankman-Fried’s ex company.

This revelation has caused many members of the crypto community to question what really happened with respect to Bald's true token holders and liquidity withdrawal. In particular, it has left a lot of people wondering whether this was really an act orchestrated by SBF while he was waiting for the trial under house arrest.

Whether or not this is true, one thing is clear: once you immerse yourself in the world of crypto, you'll never feel the need for another TV soap opera again.

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Other worthy reads:

A thread on Mantle from Charles:

Some stats on DEX TVL from Patrick:

A rug for thee, but not for me:

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The fun page: our weekly meme collection

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That's all for now, frens.

We'll see you next week. And remember, the market conditions are temporary, but our commitment to building a better DeFi is here to stay. Thanks for joining us and we look forward to seeing you back next week. Cheers!

Yours, The 🔥 Team

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