Animoca Brands Co-Founder: U.S. ETF approval positive for Asia

As the cryptocurrency market anticipates the approval of a spot bitcoin exchange-traded fund (ETF) in the United States and the subsequent boost to bitcoin’s unit price, Arthur Hayes, Chief Investment Officer (CIO) of family office Maelstrom, has issued a warning of potential market turbulence. Hayes, better known as the founder of crypto derivatives platform BitMEX, has moved on to Hong Kong-based Maelstrom, a family office that invests in early stage infrastructure ventures that implicate a move towards the decentralization of everything.Photo by Kanchanara on UnsplashMacroeconomic risk factorsIn a detailed blog post on Friday, Hayes outlines a number of macroeconomic variables that could lead to a bitcoin unit price downturn. Hayes begins by highlighting the depletion of the Federal Reserve’s reverse repo program (RRP), which has served as a significant driver for risky assets over the past year. This program allows qualified banks and investment firms to park cash and earn interest on it. The RRP balance has rapidly declined from a record high of $2.5 trillion at the end of 2022 to $700 billion. Hayes projects it to reach its historical average of $200 billion by March. As this liquidity source dwindles, he anticipates negative impacts on bonds and stocks, as well as cryptocurrencies. Fed BTFP expirationThe second factor contributing to the potential market turmoil is the expiration of the Bank Term Funding Program (BTFP) on March 12. This crucial Fed facility is designed to provide longer-term loans to commercial banks. The mechanism aids banking sector stability. Hayes is concerned that the BTFP might not be extended. Such an eventuality could lead to bankruptcy for banks holding massive unrealized losses on their bond holdings. It could lead to a “liquidity rug pull” event reminiscent of the banking crisis in March of the previous year. The crypto OG predicts that such an eventuality would force a response. “The combination of a lack of liquidity gushing from the RRP and the lack of printed money to cover the bond losses on banks’ balance sheets will decimate the financial markets globally,” he wrote. Hayes asserts that the combination of reduced liquidity from the RRP and the lack of printed money to cover bond losses could have a global impact on financial markets. In response to this scenario, he predicts that the Fed will cut interest rates during its March 20 meeting and reinstate the BTFP funding line. ‘Healthy’ correctionIn terms of bitcoin’s price, Hayes foresees a “healthy” correction of 20% to 30% from early March prices if the outlined scenario unfolds. However, he suggests the decline could be as much as 40% if BTC rallies to $60,000-$70,000 in the coming weeks. Despite this temporary plunge, Hayes remains optimistic about bitcoin’s resilience, emphasizing its status as a neutral reserve hard currency that is not a liability of the banking system and is traded globally. In a recent podcast appearance, Hayes expressed the view that the business model of U.S. dollar stablecoin issuer Tether will be challenged once multinational banks receive the go-ahead to offer fiat-backed stablecoins. Overall, Arthur Hayes has urged investors to be cautious and to prepare for potential market volatility in March, emphasizing the importance of understanding the interconnected factors influencing both traditional finance and the cryptocurrency market. 

Japanese Bitcoin treasury company Metaplanet, whose shares are listed on the Tokyo stock exchange (3350/TYO), has taken an important step towards its goal of holding 210,000 BTC by 2027. ‘Asia’s largest-ever equity raise’The firm’s CEO, Simon Gerovich, took to the X social media platform on June 6 to outline details of what he termed “Asia’s largest-ever equity raise.” Gerovich stated that Metaplanet had raised 770.9 billion yen ($5.4 billion) by means of moving strike warrants, implicating 555 million shares. Moving strike warrants are a type of equity warrant through which the strike price changes over time. Photo by Cullen Cedric on UnsplashGerovich claimed that the warrants were issued at a premium to the market due to Metaplanet’s “high volatility and deep liquidity.” The Metaplanet CEO stated that the firm is targeting 100,000 BTC by the end of 2026 and 210,000 by the end of 2027. On June 2, the firm announced that it had acquired its latest tranche of Bitcoin, adding another 1,088 BTC to its corporate treasury. The company paid an average Bitcoin unit price of 15,519,019 yen ($107,000). Metaplanet has adopted the treasury playbook first pioneered by Michael Saylor’s Strategy (formerly MicroStrategy), acquiring the leading crypto asset through a combination of equity issuance, debt financing and opportunistic buying.  Russell Okung, a former professional American football player and well-known Bitcoin proponent, took to X on June 6 to highlight that Saylor “lit the match” through Strategy in the United States.  Okung stated: “Metaplanet just launched the rocket in Asia. When capital moves, narratives follow.”He added that “Metaplanet didn’t just buy Bitcoin. They’re directing global attention toward Japan.” Both Metaplanet and Strategy have appealed to investors who are otherwise not in a position to gain exposure to Bitcoin directly, either as a result of regulatory issues or concerns with regard to the custody of the digital asset.  Corporate treasuries adopting BitcoinIn addition to these companies who have led first with a Bitcoin treasury as their primary attraction, other corporates have added Bitcoin to their corporate treasuries while maintaining their focus on other business activities.  Announcements have come thick and fast over the course of recent weeks, particularly in the Asian region.  A number of Nasdaq-listed companies, including Hong Kong-based Reitar Holdings, Indonesian fintech firm DigiAsia, Malaysia-based Treasure Global and South Korea-based K Wave Media, have all announced the addition of Bitcoin to their corporate treasuries.  Metaplanet’s new funding round will put it on track to achieve the goal of obtaining 210,000 BTC by 2027, equating to approximately 1% of the entire Bitcoin supply. The Japanese firm’s shares have risen in price by over 275% since the beginning of this year. According to BitcoinTreasuries.net, Strategy remains the largest corporate treasury holder of Bitcoin with 582,000 BTC. It’s followed by MARA Holdings, Twenty One, Riot Platforms, Galaxy Digital Holdings and CleanSpark. Tesla, Hut 8 Mining Corp and Coinbase Global also feature prior to Metaplanet which comes in tenth place.

The crypto space continues to suffer a disproportionate share of hacks and scams that were further exacerbated on Wednesday, with Malaysian crypto data aggregator the latest to succumb to a security breach. Serving as yet another stark reminder of the persistent threats plaguing the sector, a phishing scam targeted CoinGecko's X account, leading to a brief compromise that raised concerns about the safety of user information.Photo by GuerrillaBuzz on UnsplashPhishing scamDuring this incident, hackers posted a phishing link on CoinGecko's X account, falsely advertising a token airdrop for a cryptocurrency named GCKO. The deceptive post claimed that GCKO could be used for API services, including the cryptocurrency ANKR. Swift action by CoinGecko involved the removal of the fraudulent post and a public warning urging users to avoid interacting with any suspicious links or content. In an X post, CoinGecko wrote:”Our Twitter accounts @CoinGecko and @GeckoTerminal have been compromised. We're taking immediate steps to investigate the situation and secure our accounts. Please DO NOT click on any links or engage with suspicious content. Your security is our top priority.” Employee errorThe firm followed up with an update on Thursday, attributing the breach to a team member inadvertently clicking on a fraudulent Calendly link, granting unauthorized access to the hacker. Despite having two-factor authentication (2FA) enabled and employing robust security measures, CoinGecko emphasized that the inadvertent click allowed unauthorized access. The compromised accounts were then exploited to disseminate misleading information and potentially engage in malicious activities. CoinGecko expressed sincere apologies for any confusion or inconvenience caused by the incident. The company reiterated its commitment to platform security and continuous improvement of internal controls, assuring users that corrective measures were promptly implemented. SEC incompetenceCoinGecko's security incident occurred within 24 hours of a similar occurrence involving the U.S. Securities and Exchange Commission (SEC). The SEC's X account was compromised, with scammers posting a false message from Chair Gary Gensler about the approval of spot bitcoin exchange-traded funds (ETFs). While CoinGecko identified a vulnerability in its security regimen, the SEC later confirmed that the breach in its case was far more basic. It was not due to infrastructure attacks but rather the lack of 2-factor authentication (2FA) tied to the SEC's account, the most basic form of operations security. Gensler and the SEC have come in for major criticism from the crypto community in the U.S. due to a policy of regulation by enforcement that has been pursued. With that, the Commission came in for swift and harsh criticism in the immediate aftermath of its X account hack. Many pointed out the irony of Gensler advising consumers to secure their accounts back in October when the SEC itself had failed to do so. Others queried who would be responsible for what some interpreted as an episode of market manipulation, something that the SEC has perennially associated the crypto markets with. During the time that the account was compromised, millions of dollars of value were liquidated in short and long trading positions. CoinGecko's quick response serves as a valuable lesson in the importance of vigilance and proactive security measures amid the growing threats facing the cryptocurrency community.