Data from CryptoCompare shows that the price of Bitcoin moved up steadily throughout this past week, from around $16,000 seven days ago to now trade at around $17,300. The cryptocurrency moved up as the market is seemingly stabilizing.
Ethereum’s Ether, the second-largest cryptocurrency by market cap, traded in a similar way, starting the week at $1,150 and moving steadily up to now trade at $1,290. ETH tested the $1,300 resistance more than once over the week.
Headlines in the cryptocurrency space this week focused on new developments surrounding collapsed cryptocurrency FTX which, according to the Bahamas Attorney General (AG) and Minister of Legal Affairs Ryan Pinder, is now the focus of an “active and ongoing” investigation by the Caribbean nation’s authorities.
The collapsed exchange’s former CEO, Sam Bankman-Fried has said at a conference in New York that he “screwed up” but maintained that he “didn’t ever try to commit fraud”, and was shocked by the collapse of the exchange.
In the wake of FTX’s collapse, which also affected the largest asset manager in the world BlackRock as it had invested $24 million into the exchange, cryptocurrency firms have been moving to reduce their risk exposure.
Decentralized finance (DeFi) protocols Aave and Compound, in particular, have implemented new safety features after an attempted short squeeze left the former with a relatively small amount of bad debt.
Aave has executed a proposal to freeze the markets for 17 different assets in the Aave V2 lending pool on the Ethereum network, including for Yearn.Finance (YFI), Curve DAO (CRV), Gemini Dollar (GUSD), Maker (MKR), and 1inch (1INCH).
Similarly, members of the Compound DAO approved borrow caps for 10 tokens, including the protocol’s versions of Wrapped Bitcoin (WBTC), Uniswap (UNI), Chainlink (LINK), and Aave (AAVE).
Meanwhile, the MakerDAO community rejected a proposal to use up to $500 million of the stablecoin USDC to invest in a portfolio of corporate debt securities and government-backed bonds, aiming to return a yield matching the Secured Finance Rate (SOFR), which currently stands at 3.8%.
The proposal came from crypto investment firm CoinShares, but saw some 72% of votes against it. The rejection comes as MakerDAO is in the process of investing billions of dollars from its reserve and optimising its balance sheet to earn revenue from yields.
These protocols’ moves come after volatility returned to the cryptocurrency space in November.
Brazil legalises crypto as payment method
Brazil’s Chamber of Deputies, a federal legislative body, has passed a regulatory framework legalising cryptocurrencies as a payment method throughout the country. The law does not make cryptocurrencies legal tender.
The bill, which still needs to be signed by Brazil’s president to be enacted, will include digital currencies and air mileage programs in the definition of payment methods that are under the supervision of its central bank.
Another development helping cryptocurrency adoption grow involves Fidelity, which recently opened up retail cryptocurrency trading accounts after announcing a waiting list for them earlier this month. The investment powerhouse sent an email to users detailing that a Fidelity brokerage account is needed to be able to fund a new Fidelity Crypto account.
Fidelity Crypto accounts promise commission-free trading of Bitcoin and Ether. Users trying to open an account are asked to read and accept several disclosures, including a risk statement clarifying digital assets present “a variety of risks that are not presented” in “other, more traditional asset classes”.
Further helping adoption, payment processing firm Stripe announced the launch of a fiat-to-crypto on-ramp to make payments easier for Web3 companies. The service allows crypto company customers to exchange fiat for crypto while handling fraud, compliance, and know-your-customer (KYC) checks.
The fiat-to-crypto on-ramp will also help customers avoid having to set up new cryptocurrency wallets and buying digital currencies from external exchanges.
BlockFi files for bankruptcy
Over the week, cryptocurrency lender BlockFi filed for bankruptcy in the US, citing “significant exposure” to the collapse of cryptocurrency exchange FTX. BlockFi had already halted most activity on its platform and is seeking court protection to restructure, settle its debts, and recover money for investors.
BlockFi has said that FTX’s collapse was “shocking,” and sued FTX founder Sam Bankman-Fried’s Emergent Fidelity Technologies for the Robinhood (HOOD) shares held by the company and pledged to BlockFi as collateral.
Even as DeFi platforms move to reduce their risk Ankr, which calls itself a “node-as-a-service” platform, suffered a $5 million exploit over a bug in its code that allowed attackers to mint unlimited tokens.
According to security research firm PeckShield, the code behind the Ankr contract allows any user to mint an unlimited amount of the protocol’s reward-bearing staking tokens without verification.
Francisco Memoria is a content creator at CryptoCompare who’s in love with technology and focuses on helping people see the value digital currencies have. His work has been published in numerous reputable industry publications. Francisco holds various cryptocurrencies.