First Mover Americas: Crypto Market Trades in the Green Despite Hacks

• Price Point: BTC and ETH both showed gains on Wednesday despite hacks on the Solana blockchain.
• Market Moves: Some analysts are taking the possibility of an Ethereum fork seriously as BitMEX issued a blog post arguing that a new chain might generate interest from market participants.
• Chart of The Day: Solana's SOL put-call volume ratio spikes.

This article originally appeared in First Mover, CoinDesk’s daily newsletter putting the latest moves in crypto markets in context. Subscribe to get it in your inbox every day.

Price point

The crypto market was mostly trading in the green on Wednesday despite news that popular layer 1 blockchain Solana was exploited Tuesday night.

An unknown attacker drained at least $5 million worth of SOL, SPL and other Solana-based tokens from unsuspecting users.

Bitcoin (BTC) was up 2% on the day, reclaiming $23,000. The price of BTC has moved above the highly watched 200-week moving average of $22,900, a positive sign for bulls.

Ether (ETH) was up 4.7% over the last 24 hours at $1,660. Uniswap’s UNI was up 15%, Curve (CRV) gained 10%, and Aave rose 8%.

Although the prices of bitcoin and ether haven't been affected by the news of the hack, Solana’s SOL token slipped 2%.

“The hack will definitely cast a shadow over Solana’s credibility as a better alternative to Ethereum, especially when it comes to security,” Mikkel Morch, executive director of ARK36, a digital asset fund, wrote in an email. “It may even give Ethereum some additional boost from the narrative perspective as the safest and most reliable DeFi (decentralized finance) ecosystem.”

Earlier in the week, the cryptocurrency bridge Nomad suffered a $200 million exploit. Since that breach, blockchain security company PeckShield said $9 million has been returned, equating to around 4.75% of the total loss.

In other news, Ethereum developers addressed a potential glitch ahead of the Merge in the 92nd Consensus Layer Call. One researcher said that the chance of such a glitch (an MEV-boost failure) is slim, but contingencies should ensure that the Merge still goes smoothly.

In traditional markets, U.S. stock futures climbed as anxiety surrounding tense U.S.-China ties eased.

Biggest Gainers

Asset Ticker Returns DACS Sector Avalanche AVAX +6.6% Smart Contract Platform Chainlink LINK +5.5% Computing Polygon MATIC +5.4% Smart Contract Platform

Biggest Losers

Asset Ticker Returns DACS Sector Solana SOL −0.6% Smart Contract Platform

Market Moves

Crypto Exchange BitMEX Offers Strategy on Potential 'ETHPoW' Split as China Miner Contests Ethereum Merge

It’s little more than speculation now that some Ethereum miners might break away when the world’s second-biggest blockchain shifts as soon as September to a new “proof-of-stake” system that’s supposed to be better for the environment.

But with the Ethereum Merge still at least a month away, some analysts are already sharpening their pencils on various strategies to profit from any revolt in the ranks.

According to Decrypt, Chinese crypto miner Chandler Guo has started a campaign to fork the Ethereum blockchain and create a spinoff, hewing to the proof-of-work (PoW) system that Ethereum uses now.

The story was based on a Chinese-language tweet from Guo: “Ethpow will be coming soon,” the post reads. “I fork ethereum once, I will fork it again!”

The cryptocurrency wouldn't be ETH post-Merge. With the fork, or code change, Guo would create a new cryptocurrency called ETHPOW, according to Decrypt.

Investment research analysts at BitMEX published a blog post arguing that a new chain might generate some interest from investors and traders.

"Although there are many technical challenges that ETHPoW faces, as long as the chain survives, it looks likely that there could be positive narratives around the coin and leading centralized exchanges are likely to list it," the analysts wrote.

As outlined by BitMEX:

“Doing the above trade, you have potentially got more USD for free with almost zero risk! Well, zero risk when only considering certain types of risk, such as price movements,” the BitMEX post states.

“ETHPoW may generate a lot of excitement, and we predict that ETH vs ETHPoW will be a popular trading pair post-split, at least until another interesting dynamic comes along," BitMEX analysts said.

But others are dismissing the effort almost entirely.

According to Will Harborne, founder of Rhino.fi, there is likely little profit to be made from trading ETHPoW.

Read the full story here.

Chart of the Day: SOL Put-Call Volume Ratio Spikes

By Omkar Godbole

• Solana's put-call volume ratio, a gauge measuring the number of put options traded relative to calls, surged above 3 early Wednesday, pointing to bearish market sentiment.
• The surge implies that more than three put options were traded for every call option.
• Perhaps investors sought protection against a price drop following reports of a multimillion-dollar hack from Solana's digital wallets Phantom and Slope.
• A put option offers insurance against price drops while a call option offers protection against price rallies.
• Sol's Deribit-based options market is quite small relative to ether and bitcoin. As of this writing, the notional open interest in the SOL options market was $19.2 million – a meager 0.42% of bitcoin's $4.5 billion.

Latest Headlines

• Bank of America Dismisses Assertion That Blockchains Have no Intrinsic Value, Citing Transaction Fees: The Ethereum blockchain has generated around $3.9 billion in fees this year, the report said.
• Hackers Send Back $9M to Nomad Bridge After $190M Exploit: The popular Ethereum to Moonbeam bridge is engaging with law enforcement and data analytics firms.