The Breakdown First Five - Wednesday, August 9 2023

Welcome back to The Breakdown First Five — the 5 most interesting and/or important stories in bitcoin, crypto, and markets to start your day.

5. Open Interest Spikes

Bitcoin open interest shot up alongside a 3% gain yesterday as whales duke it out in the order books. OI hit a yearly high as bears recorded $65M in short liquidations, a 6 week high. Bitcoin briefly reached about $30,000 on the back of softening long term US treasury yields and a strengthening institutional adoption narrative. But is the massive positioning a sign of distressed whales hunting to stay alive?

4. Novo Joins the ETF Call

Mike Novogratz said Galaxy Digital will fight for market share if a Bitcoin ETF is approved. The Chumbawumba fan only has one item left on his 2022 wishlist and he seems optimistic it will happen. He said that his conversations with Blackrock made him think approval is a matter of “when, not if”. He gave a 4-6 month expected timeline. Novo also lamented difficulties getting listed on Nasdaq, saying the holdup amid regulatory uncertainty was “un-American at its core."

3. SBF Still Answering to Donation Allegations

The DOJ will formally drop a campaign finance charge against Sam Bankman-Fried shortly. Although the charge won’t proceed, the DOJ will still introduce the evidence in relation to fraud and money laundering charges. So we’ll still get to hear how Sam used customer funds to buy politicians. Allegedly. Meanwhile Sam considers putting forward a defense of "mental condition or defect" and asks for a 2 day extension to file.

2. Base Launch Day

The day is finally here, Coinbase’s layer-2 ‘Base’ goes live at 9am. Head of Protocols Jesse Pollack said he doesn’t know what to expect. “There’s no playbook” for launching a blockchain as a publicly listed company. We already saw what happens when advanced traders get access to a fresh DeFi ecosystem last month after a memecoin rug had degens tearing their hair out. Hopefully today’s launch is much less silly.

1. Fed Introduces Crypto Supervision

The Federal Reserve has introduced a crypto supervision program to provide additional oversight for banks who deal with the Crypto industry. Some called this the formalization of Operation Chokepoint 2.0. Others viewed it as the Fed’s first step in creating a crypto policy for banks. The Fed claimed the program would “allow for innovations” across crypto and fintech to be adopted in banking, but it would still represent additional regulatory scrutiny for those banks.

Thanks for reading -NLW