Crypto Currents: Digital asset markets slide on liquidations, Fed speech jitters

The cryptocurrency market is seeing a significant downturn to start the week as investors weigh macroeconomic pressures against continued institutional interest and major security events. Stay up on the crypto news that matters with “Crypto Currents,” from The Fly. Join us 2 PM daily for your essential briefing on the fast-moving world of cryptocurrency on FlyCast radio. Also, subscribe to our YouTube channel for the Crypto Fly By weekly recap.

CRYPTO SLIDES AS LIQUIDATIONS SURGE AHEAD OF POWELL SPEECH: The cryptocurrency market saw a broad selloff to start the week, driven by a surge in liquidations and investor caution ahead of a key speech from Federal Reserve chairman Jerome Powell. Bitcoin (BTC) fell below $115,000, and Ether (ETH) dropped below $4,250. The downturn was accelerated by a wave of forced selling, with data from CoinGlass showing that total 24-hour liquidations surged 327%, affecting over 131,000 traders, wiping out more than $300M in leveraged positions. Market participants are now focused on the upcoming Jackson Hole Symposium, where Fed Chair Powell is scheduled to speak. Stronger-than-expected inflation data has led traders to temper expectations for an interest rate cut in September, with Powell now anticipated to signal a more cautious, “wait-and-see” approach. Despite the pullback, some analysts believe the long-term bull case remains intact, citing continued inflows into spot crypto ETFs and the potential for more ETF approvals by year-end.

INSTITUTIONS UNDETERRED BY PULLBACK, STRATEGY BUYS THE DIP: The recent dip comes after a second quarter that saw major institutional players increase their crypto holdings. New filings with the SEC show that Brevan Howard nearly doubled its position in BlackRock’s (BLK) iShares Bitcoin Trust to a stake worth more than $2.6B. Goldman Sachs (GS) increased its holdings to $3.3B across IBIT and Fidelity’s FBTC. Other notable investors included Harvard University, with a reported $1.9B stake, and Wells Fargo (WFC), which quadrupled its IBIT holdings to $160M. In corporate news, Strategy (MSTR) continued its accumulation strategy, acquiring an additional 430 bitcoin for $51.4M last week, according to a company filing. The purchase brings its total holdings to 629,376 BTC.

GOOGLE LIFTS STAKE IN TERAWULF IN $1.4B DEAL: Google (GOOGL) is increasing its investment in bitcoin miner and AI-computing company TeraWulf (WULF). According to The Wall Street Journal, Google will provide an additional $1.4B backstop for debt financing related to the expansion of TeraWulf’s Lake Mariner data center in New York. In return, Google will receive warrants to buy 32.5M TeraWulf shares, boosting its total potential stake in the company to about 14%. The funding supports the buildout of a new data center for AI cloud platform Fluidstack.

WINKLEVOSS-LED GEMINI FILES FOR IPO: Gemini Space Station, the crypto exchange run by the Winklevoss twins, has filed for an initial public offering, becoming the latest digital asset firm to pursue a public listing. An SEC filing revealed that the company posted a net loss of $282.5M on revenue of $67.9M for the first half of the year. Goldman Sachs and Citigroup (C) are leading the offering. The company intends to list on the Nasdaq under the ticker symbol “GEMI”.

QUBIC SETS SIGHTS ON DOGECOIN AFTER ALLEGED MONERO ATTACK: Finally, the market is digesting a significant security event after the privacy coin monero (XMR) was targeted in an allegedly successful 51% attack. According to a Qubic spokesperson, the AI-focused mining pool claimed it had gained majority control of the network’s hashrate, though the claim may be a tactic to spread fear and doubt. In response, the Kraken exchange paused all monero deposits as a precaution. The Qubic community has since voted to make dogecoin (DOGE) its next target for a blockchain takeover.

ANALYST NOTES:

• H.C. Wainwright analyst Kevin Dede reiterated a Buy rating and $7 price target on Bit Digital (BTBT), noting the company’s decision to wind down bitcoin mining and invest in an ethereum treasury management strategy. The firm notes Bit Digital is pursuing a diversification and de-risking strategy by transforming into a holding company whose value is derived from its liquid digital asset treasury and its ownership in a “pure-play” high-performance computing infrastructure company.
• In a separate note, H.C. Wainwright analyst Mike Colonnese reiterated a Buy rating and $6 price target on HIVE Blockchain (HIVE). The company reported better-than-expected Q1 results and reiterated near-term guidance for both its BTC mining and high-performance computing businesses.

PRICE ACTION: As of time of writing, bitcoin (BTC) was trading at approximately $115,701.32, while ether (ETH) was trading at $4,314.85.