- Crypto Saving Expert's Newsletter
- Posts
- Crypto Saving Expert Newsletter - Issue 112
Crypto Saving Expert Newsletter - Issue 112
In partnership with
Good morning! Bitcoin is nearing a pivotal moment in its timeline, where a significant surge is likely to begin. Let's dive in for a closer look at what is going on behind the scenes with bitcoin and the overall Web3 market. 👇
This week's issue will feature technical analysis of bitcoin as well as important dates and key news stories.
Table of Contents
Crunch Time For Bitcoin
Bitcoin is approaching a time-based inflexion point from which an explosive expansion phase will likely originate.
Bitcoin’s Outlook
Bitcoin retraced Friday’s upside move throughout Sunday night and Monday.
However, demand formed around similar levels to Friday, with bitcoin bouncing thus far on Tuesday.
From here, bitcoin could head towards the higher level seen over the weekend, where supply entered the market. Still, strong momentum could take bitcoin over this and higher.
Inverted Chart
The inverted chart can provide an alternative view of price action and remove bias.
Looking at bitcoin’s weekly inverted chart, two scenarios are apparent. The price could keep grinding higher before entering the supply zone, from where it would likely fall to new lows.
Secondly, the price is still within a channel, but it resembles a pattern of stairs up and the elevator down. This would also cause the price to fall out of the channel down towards new lows.
Upcoming Events
Several important upcoming events could affect bitcoin’s price.
Firstly, the FOMC meeting occurs on Wednesday. This is expected to see the Federal Reserve cut interest rates.
At the end of the month, CZ, the founder and former CEO of Binance, will be released from US prison.
In October, it will mark six months after the bitcoin halving event, with the US election following just weeks later.
Cycle History
A familiar pattern can be noticed by looking at bitcoin’s price history in terms of halvings.
In the last three halvings, including the most recent, bitcoin has consolidated for many months after the event.
In the 2016/2017 and the 2020/2021 cycles, this led to bitcoin undergoing a huge rally afterwards.
Could this pattern occur again?
Fear & Greed Index
The Fear and Greed Index remains mostly unchanged from last week and resides at 33. Investors are still fearful, likely due to bitcoin’s inability to reclaim $60,000.
However, if bitcoin can reclaim the psychological level and hold above, confidence may return to the market.
Important Dates
Tuesday, 17 August, 12:30 UTC - US Retail Sales
The retail sales data is published by the Census Bureau and comprises two pieces of data: the month-over-month (MoM) and the control group.
The MoM figure measures the monthly changes in retail sales, demonstrating consumer confidence to spend money in the economy. This figure is forecast at 0.2%, with the previous figure at 1%.
The second figure is the control group, which measures the entire industry sales and estimates the personal consumption expenditures (PCE) for goods. The control group data is not forecasted, but the previous data came in at 0.3%.
Wednesday, 18 August, 18:00 UTC - Fed Interest Rate Decision
The Federal Open Markets Committee meeting occurs eight times a year. The Fed meets to discuss recent economic data and the strength of the US economy before deciding whether it should increase, decrease, or leave rates unchanged.
The Federal Reserve is comprised of a Board of Governors that assists its Chair, Jerome Powell, in making interest rate decisions and steering the US economy.
At 18:00 UTC, the Fed will announce its interest rate decision, in what is the most anticipated meeting thus far this year. Afterwards, a press conference will begin at 18:30, where Powell will conduct a 30-minute speech before taking questions from the press.
The consensus is that the Fed will reduce interest rates by 0.25%.
Gainers
Losers
Binance Founder CZ To Be Released From Prison Next Week
CZ is coming out of prison on 29 September, according to the U.S. BOP data.
The U.S. Federal Bureau of Prisons has confirmed that the former Binance CEO Changpeng Zhao will be released by 29 September.
Source: U.S. BOP
In April, CZ was sentenced to four months in prison, including a $50m personal fine, after pleading guilty to failing to implement proper anti-money laundering protocols at Binance.
Zhao began his sentence at a low-security California facility. However, on 22 August, his location was updated to “RRM Long Beach,” which stands for Residential Reentry Management field office.
According to the BOP website, “RRMs administer contracts for community-based programs and serve as the Federal Bureau of Prisons local liaison with the federal courts, the U.S. Marshals Service, state and local corrections, and a variety of community groups within their specific judicial districts.”
RRMs essentially help in managing the reentry process for inmates who are nearing the end of their sentences.
What Next for CZ After Prison
Zhao will not be returning to hold any executive position at Binance after he’s released. As part of the settlement plea in November 2023, CZ agreed to step down as the CEO of Binance, though he will continue to retain his ownership of the exchange.
However, in a tweet announcing Richard Teng as the new Binance CEO, Zhao noted that he would be open to an advisory role as permitted by the U.S. resolutions.
“As a shareholder and former CEO with historical knowledge of our company, I will remain available to the team to consult as needed, consistent with the framework set out in our U.S. agency resolutions,” CZ wrote.
The former Binance CEO may return to building Giggle Academy, which he started before his sentencing. The non-profit educational project aims to provide children with “fun and addictive” access to education.
Tether's USDT Deemed Property by English Court
A judge in England declared that USDT attracts property rights and can be part of trust property just like any other property.
In a landmark judgement that might provide direction for crypto regulation in the United Kingdom, the High Court of Justice for England and Wales ruled that the popular stablecoin Tether (USDT) can be classified as property.
“USDT attract[s] property rights under English law,” said Deputy High Court Judge Richard Farnhill.
“It is neither a chose in action nor a chose in possession, but rather a distinct form of property not premised on an underlying legal right. It can be the subject of tracing and can constitute trust property in the same way as other property,” he added.
Judge Farnhill’s comments were part of a ruling on a case filed by Fabrizio D’Aloia, who claimed he had been a victim of a cryptocurrency scam. Defendants in the case included Aux Cayes Fintech, the parent companies of crypto exchanges Binance, Gate, Poloniex, Bitkub and two unnamed individuals.
In the lawsuit, D’Aloia claimed that one of the unidentified defendants coaxed him to transfer digital assets in USDT and USDC, totalling around £2.5m ($3.3m). The individual then moved the funds over various wallets before the second unidentified defendant withdrew them as fiat currency through Gate and Bitkub.
However, as per Judge Fanhill, the Binance case had already been settled, the one against Aux Cayes Finetech was struck out, and the plaintiff sought separate summary judgements against Poloniex and Gate. This then left Bitkub as the primary defendant.
But, Judge Fanhill concluded that D’Aloia “has no claim against Bitkub because it did not receive anything from him.”
The UK Parliament is Also Considering Classifying BTC and Digital Assets as Property
The judgement that defines USDT as property comes a day after a bill was proposed in the UK parliament that seeks to include “digital belongings,” such as Bitcoin, NFTs, and other tokens, as personal property under English and Welsh property law.
If passed, the bill will provide much-needed clarity on crypto regulation in the UK, thus aligning with the country’s vision of becoming a global crypto hub.
How MEV Bots Operate: Understanding Front-Running, Back-Running, and Sandwich Attacks
Maximal Extractable Value (MEV) bots are advanced automated programs that operate within blockchain ecosystems. They exploit the order of transactions to extract profits.
MEV bots take advantage of blockchain networks' transparency by executing strategies like front-running, back-running, and sandwich attacks.
Let’s dive into the mechanics behind these tactics and explore how smart contracts play a role.
1. Front-Running: Beating You to the Punch
Front-running is one of the most common strategies used by MEV bots.
A front-running bot monitors pending transactions in the mempool, the space where transactions wait before being added to a block. When an exploitable high-value transaction is detected, MEV bots quickly place their own buy order just before the target transaction, securing a position at a lower price than the high-value transaction will get.
Once the price rises due to the user's large purchase, the bot sells its own position at a higher price, generating a profit at the expense of the original trader.
Front-running takes advantage of blockchain transparency, and since miners decide which transactions to include in blocks, bots often incentivise them by paying higher gas fees to ensure their orders are processed first. This technique is prevalent in decentralised exchanges (DEXs) and can significantly affect trading outcomes.
2. Back-Running: Riding the Profitable Wave
Back-running is another method used by MEV bots to profit from blockchain users. It operates like a front-run, except the bot takes advantage after a profitable trade has been executed.
During a back-running event, a bot identifies a transaction that will likely lead to a price increase and then immediately places a trade after the target transaction is confirmed. By entering the trade just after the price movement, the bot can ride the upward momentum and exit with a profit as the market responds.
Back-running relies on precise timing, as the bot must execute its trade quickly after detecting the profitable transaction. Like front-running, it uses gas fees to prioritise transaction processing, ensuring it capitalises on the market shift before others can react.
3. Sandwich Attacks: Manipulating the Price
Sandwich attacks combine both front-running and back-running into a single strategy.
In these examples, the MEV bot places a buy order before and a sell order after a user's transaction. The bot front-runs the target by buying just before the price increase, then sells immediately after the user’s transaction, effectively “sandwiching” the trade. This results in the user paying an inflated price due to the bot’s intervention, while the bot profits from both ends of the transaction.
Sandwich attacks are widespread on DEXs, where liquidity and pricing can be more easily manipulated. These strategies damage the victim, underline the requirement for anti-MEV bot measures and undermine the fairness of decentralised markets.
4. The Role of Smart Contracts in MEV Exploits
Smart contracts are crucial to MEV bots' operations. These self-executing contracts automatically enforce the terms of an agreement once certain conditions are met, making them ideal for automating trades. However, the same transparency and automation that make smart contracts so valuable can also be exploited by MEV bots.
Bots are designed to analyse and predict the behaviour of these contracts, using the code's transparency to place strategically timed trades. They rely on the deterministic nature of smart contracts, knowing that once conditions are met, they can trigger their own trades to take advantage of the market.
This makes smart contracts both a powerful tool for decentralised finance and a potential vulnerability to MEV strategies.
5. How to Protect Against MEV Bots
While MEV bots are part of the blockchain ecosystem, there are steps traders and developers can take to reduce their impact.
Solutions like privacy-focused transactions, delayed transaction reveals, and decentralised transaction ordering are being explored to minimise the risk of front-running and sandwich attacks. Additionally, some DEXs have implemented protocols to randomise transaction orders or allow users to pre-sign transactions privately, making it harder for bots to detect and exploit them.
👉 If you're eager to connect with like-minded individuals and propel your crypto success to new heights, then CSE Plus+ is the community you've been searching for.
🏎️ In the fast-paced world of cryptocurrencies, networking with fellow enthusiasts and experts can be the key to unlocking valuable insights, innovative strategies, and profitable opportunities.
đź‘Ą Our exclusive Discord channel is where passionate crypto aficionados converge, sharing their knowledge, experiences, and market analyses.
🤝 Together, we're shaping the future of crypto, and by joining CSE Plus+, you'll be at the forefront of this exciting journey towards financial empowerment and crypto excellence.
🚨 Do not miss out on the chance to supercharge your crypto endeavours – join CSE Plus+ today!
🙌 Use code = CSE10
đź’° This code gives 10% off entire annual membership options!
Looking for unbiased, fact-based news? Join 1440 today.
Upgrade your news intake with 1440! Dive into a daily newsletter trusted by millions for its comprehensive, 5-minute snapshot of the world's happenings. We navigate through over 100 sources to bring you fact-based news on politics, business, and culture—minus the bias and absolutely free.
This Newsletter is strictly for informational purposes only; the content is generic and has not been tailored in any way. Crypto Saving Expert UAB (“CSE”) is not providing, and should not be interpreted as providing, any form of offer of any currency, security, financial instrument or digital asset, or investment advice, recommendations or strategy. The content of this Newsletter is not intended to replace your own research with regard to any assets, products or services, and any action taken on the basis of this material is entirely at your own risk. CSE neither accepts nor assumes any liability or responsibility for any loss or damage arising out of, or in any way connected to, the Newsletter content. Cryptocurrencies and digital assets may be unregulated in your jurisdiction, any profits may be subject to tax and the value of any investment could fall.
If you click on a link within this Newsletter to go through to a provider, we may get paid. This usually only happens if you get a product/use a service from it. This is what helps fund CSE and keeps the majority of our content free to use. Two crucial things you should know about this, however: a) this never impacts our editorial recommendations, if something is included, it is because we independently rate it as the best; and b) you will always get as good a deal, or better, than if you went direct. For full details on how CSE is funded, please click here.
CSE collects, processes and stores certain data. Such data may be shared with CSE’s wholly owned subsidiary company, Crypto Saving Expert Limited. Please note that by submitting information about yourself to CSE you are consenting to such use. For full details on our collection, processing and storage of data, together with your rights in relation thereto, please consult our Privacy Statement here.