First Mover Americas: Bitcoin Drops Below $20K, Michael Saylor Sued for Tax Fraud

The latest price moves in bitcoin (BTC) and crypto markets in context for September 1, 2022. First Mover is CoinDesk’s daily newsletter that contextualizes the latest actions in the crypto markets.Read MoreCoinDesk

Price Point: Bitcoin has dropped below the critical level of $20,000 as MicroStrategy’s Michael Saylor gets sued by the District of Columbia for tax fraud.

Market Moves: The potential Ethereum hard fork token ETHPOW could trade at 1.5% of ether’s price, futures suggest.

Chart of the Day: Bitcoin exchange inflows rise.

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.

Bitcoin (BTC) dipped below $20,000 on Thursday as investors get a tough start to the month after a rocky August. The world’s largest cryptocurrency by market value has lost 2% on the day, following a 14% decline last month.

Stocks and bonds also fell, along with European and Asian indexes. Oil prices dipped for a third day in a row.

Ether (ETH), the second largest cryptocurrency by market capitalization, lost 1.6% over the last 24 hours and was trading at $1,560 at the time of writing. Litecoin (LTC), EOS and unus sed leo (LEO) posed small gains.

Bank of America said Wednesday in a research podcast that the chance of a more hawkish Federal Reserve and the likelihood of interest rates staying higher for longer has not been fully priced into risk assets, including cryptocurrencies.

In the news, the District of Columbia is suing MicroStrategy founder Michael Saylor for tax fraud. The attorney general’s office is also suing the business software company for allegedly helping him evade taxes on his earnings in the district. MicroStrategy shares were down more than 4% following the news.

Crypto lender Celsius is facing another group of customers who want their money back, Nikhilesh De reports.

Developers behind the Helium network have proposed shifting the entirety of the protocol to Solana, citing faster transaction speeds, high uptimes and more interoperability with other blockchains.

And finally, in Latin America, CoinDesk’s Marina Lammertyn unpacks how the political turmoil in Peru has led citizens to turn to crypto as a safe haven.

Biggest Gainers

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Potential Ethereum Hard Fork Token ETHPOW Could Trade at 1.5% of Ether Price, Futures Suggest

By Omkar Godbole

If you have been following the crypto market for some time, you probably have heard that Ethereum, the world’s largest smart-contract blockchain, could undergo a hard fork later this month, splitting into a proof-of-stake (PoS) chain and a proof-of-work (PoW) chain.

The Ethereum chain with the PoS consensus mechanism will retain the seven-year-old ether (ETH), currently trading at $1,570, as its native token. The PoW chain, representing a group of miners opposing the impending Merge, or switch to PoS, would have a new token called ETHPOW.

We know that if the chain splits, ETH holders will receive ETHPOW free of cost, much as corporate shareholders receive additional units on a stock split. What’s not known is the value of the ETHPOW token.

One way to gauge the potential value is to look at the difference between spot ether and futures prices, according to Paradigm, which focuses on over-the-counter trading for institutions.

As of Wednesday, ether Sept. 30 expiry contracts listed on major exchanges traded at a discount of $18 to the spot price, indicating the market is expecting the ETHPOW token to draw a price of at least $18 at inception.

“We can infer how much the market estimates ETHPOW will be worth from simply looking at spot-future basis, since spot = PoS + PoW, while future is just PoS,” Paradigm said in a Merge-focused blog post published Wednesday. “Currently, the basis is implying ETHPOW to be priced ~$18, which is ~1.5% of ETH market cap.”

Trading giant Cumberland voiced a similar opinion last month, saying, “we can infer how much the market estimates ETHPOW will be worth from the spot-future basis.”

The logic behind considering the negative $18 basis as a possible ETHPOW price is that the discount represents the risk-free cost of collecting the potential forked tokens. So, if traders are willing to pay $18, they must expect the token to be priced at $18 or higher.

Read the full story here.

Bitcoin Exchange Inflows Rise

By Omkar Godbole

Net transfer volume of BTC from/to exchanges (Glassnode)

Centralized exchanges received more than 13,000 BTC on Wednesday, the highest daily net inflow since July 17.

Investors usually deposit coins on exchanges when intending to liquidate their holdings.

Large inflows, therefore, are taken to represent an increase in coins available for selling.


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