Bitcoin, Ether fall as market digests Curve hack

Bitcoin and Ether prices fell in early Tuesday afternoon trading in Asia, with Bitcoin losing support at US$29,000, amid concern about the hack of the popular decentralized finance platform Curve Finance over the weekend that saw an estimated US$41 million stolen and raised concerns about a DeFi contagion. The hack has been linked to a flaw in a programming language. These concerns increased as reports surfaced on Tuesday of an attack on the LeetSwap exchange running on Coinbase. Solana and Matic led the top 10 losers mid Tuesday. Litecoin also gave up gains ahead of its halving event on Wednesday.

Bitcoin, Ether hold steady

Bitcoin fell 1.8% in the last 24 hours to US$28,872 as of 12:50 p.m. in Hong Kong, according to data from CoinMarketCap. 

The world’s largest cryptocurrency fell under the US$30,000 support floor in the latter weeks of July and has fluctuated around US$29,000 since then, unable to find buying support for a breakout in the so-called summer doldrums when trading in many capital markets slows. 

However, drama came over the weekend when decentralized stablecoin exchange Curve Finance reported a security issue in older versions of Vyper, the programming language used for smart contracts. 

According to data from smart contract auditing firm BlockSec, hackers drained an estimated US$41 million in cryptocurrencies from the platform as a result of the malfunction, raising concerns about possible problems at other DeFi platforms.

Curve Finance is the third largest decentralized financial exchange (DEX) by 7-day trading volume, according to DeFi data tracker DefiLlama.

Bitcoin and Ether lost ground as CoinDesk reported that LeetSwap said its working with on-chain security experts to recover 340 Ether after PeckShield tweeted the exchange on Coinbase’s Layer 2 blockchain had been attacked.

In earlier comments related to the Curve hack, Justin d’Anethan at Hong Kong-based crypto market maker Keyrock said Bitcoin had held up well considering.

“Indeed, after the Vyper hacks that affected a number of pools in Curve and pushed prices of CRV, CVX and FXS along with other yield protocols down, BTC and ETH held steady,” he said before reports of the LeetSwap exploit.

Lackluster trading and caution is seen elsewhere in crypto asset investment products, which saw minor outflows of US$21 million last week, 93% of which were from long-Bitcoin investment products, according to an emailed report from European alternative asset manager CoinShares. 

“This suggests investors have been taking profits in recent weeks, with the sentiment for the asset overall remaining supportive,” the CoinShares report said.

Nigel Green, the CEO and founder of the deVere investment advisory group, said summer typically ushers in reduced market activity, which in turn can create price inefficiencies and increased volatility.

“When used effectively and efficiently, volatility can be an extremely powerful investment tool as you can enhance your portfolios with high quality assets at lower entry points,” Green said in email comments.

“Not only does Bitcoin remain one of the best performing asset classes of the decade, I believe its performance will further strengthen. Both institutional and retail investors are increasingly seeing the value of a digital, global, borderless and tamper-proof currency and store of value.

“This trend will increase as adoption picks up further and as confidence grows again in the global economy.”

Ether, the second largest crypto token by market cap, fell 2.10% to US$1,825 early Tuesday afternoon after trading flat in the morning.

All other top 10 non-stablecoin cryptocurrencies fell Tuesday morning. Solana led the losers, dipping 4.6% to US$23.31, while Matic was close behind with a drop of 4.1% to US$0.67.

Litecoin fell 3.5% to US$89.83, barely holding a gain of 1% for the last week ahead of its halving event on Wednesday. 

The halving is expected to cut the mining reward for each successfully minted Litecoin block from 12.50 LTC to 6.25 LTC, increasing its scarcity and potentially triggering a rise in the token’s price. Litecoin is up about 31% year to date.

The total crypto market capitalization fell 1.8% in the past 24 hours to US$1.16 trillion, while trading volume rose 17.6% to US$30.83 billion.

NFT 500 ends July in red

The indexes are proxy measures of the performance of the global NFT market. They are managed by CryptoSlam, a sister company of Forkast.News under the Forkast.Labs umbrella.

The Forkast 500 NFT index fell 1.19% in the past 24 hours to 2,516.20 as of 7:45 a.m. in Hong Kong, resulting in a drop of 5.37% for the week and 10.70% for the month.

Forkast’s Ethereum, Solana and Cardano NFT market indexes all logged losses, while the index measuring the performance of Polygon’s NFT market edged up a slight 0.18%. 

Total NFT trading volume fell 2.93% in the past 24 hours to US$17.65 million, according to data from CryptoSlam. Volume on Ethereum, the largest NFT network, declined 10.17% to US$11.68 million. 

Trading volumes on Polygon jumped 87.67% to US$1.14 million to take second spot in Cryptoslam’s rankings. Solana and BNB networks also saw increases in NFT volumes.

NFT trading volume on the Bitcoin network dropped 20.08% to US$479,775. “An ecosystem that many, myself included, had predicted to one day flip Ethereum is showing its limitations,” said Yehudah Petscher, NFT Strategist at Forkast Labs. 

“With no avenues right now for utility, traders are finding few reasons to collect these assets that promise nothing more than small jpegs to collect. We’ll need to see some innovation or more premium art on Bitcoin if we want to see its ecosystem turn around.”

By NFT collections, Ethereum-based Bored Ape Yacht Club (BAYC) saw the largest 24-hour trading volume, gaining 26.26% to US$1.12 million. DMarket and Gods Unchained Cards, which are both in-game NFT items, ranked second and third.

U.S. equities finish July strong

U.S. stock futures gained as of 10:50 a.m. in Hong Kong, after the three major U.S. stock indexes ended July with strong gains of between 3% to 4%. 

In Asia, the main stock indexes rose on Tuesday morning, with the exception of China’s Shanghai Composite after manufacturing data missed expectations. Private research firm Caixin Insight Group’s China General Manufacturing PMI for July released Tuesday dropped for the first time since April, missing market estimates and hitting its lowest point in six months.

“China’s economic recovery in the first quarter exceeded expectations, but the momentum weakened in the second,” wrote Wang Zhe, senior economist at Caixin. “Although the data for industrial production and investment in June showed some signs of recovery, macroeconomic growth remained sluggish, and considerable downward pressure on the economy persisted.”

Zhe added: “guaranteeing employment, stabilizing expectations and increasing household income” should remain the top priorities of Chinese policymakers.

Japan’s Nikkei 225 gained as the country’s unemployment rate edged lower in June as forecasted, marking the country’s lowest jobless rate since January.

In the U.S., second quarter earnings season continues with reports from Apple, Amazon, Pfizer and others through the week, plus more economic indicators. The S&P Global’s U.S. manufacturing purchasing manager’s index (PMI) will be out Tuesday and the July employment report on Friday.

On interest rates, the Federal Reserve next meets on Sept. 19 and 20 after raising a quarter of a point in July. Rates are now between 5.25% to 5.50%, the highest since January 2001.

Fed Chair Jerome Powell last week reiterated the bank takes a data-driven approach to decide interest rate policy and Fed economists said the likelihood of a recession in the U.S. has diminished, indicating to some analysts the Fed may leave rates unchanged next month.

The CME FedWatch Tool predicts a 82.5% chance the Fed will keep rates as is in September, and a 17.5% chance for another 25-basis-point increase.

(Updates with equity section)