11th August 2022 > > The Merge and Hotbit.

tl;dr

The Merge successfully passes another test, whilst Hotbit fails its own test.

Market Snap

Market Wrap

The CCC commented yesterday that the leveraged players were overextended to the short side. With the perpetual futures funding rate firmly back to 1bp, you can be sure that the overnight rally in BTC of $1,600 was due to a bunch of shorts getting liquidated.

Nice.

Curious Cryptos’ Commentary – The Merge

The final test for The Merge using the Goerli testnet appears to have been successfully completed yesterday, though it might be wise to wait a day or two for final confirmation. Anthony Sassano, a core developer for the Ethereum Foundation and ETH maximalist, tweeted:

“The Goerli testnet has been successfully merged and is now a full Proof of Stake chain. Next up is (finally) the Ethereum mainnet!! The Merge is coming”

The date has previously been tentatively set for mid-September.

Regular readers of the CCC already know that progress towards The Merge was expected to result in a ramp-up in the price of ETH. Indeed, we have seen about an 80% gain in the last month.

The successful implementation of The Merge is likely to result in a counter-intuitive sell-off in ETH in the following weeks as investors realise that moving to Proof-of-Stake (POS), though very important, is just one of the milestones in the current transformation of the Ethereum blockchain.

Curious Cryptos’ Commentary – Hotbit

Hotbit is a Shanghai based centralised exchange, who seem to have an almost unlimited marketing budget utilising a strapline implying almost unlimited liquidity (I cannot remember the exact form of the words – can anyone help me out?).

I confess that I have always had an aversion to using Chinese crypto exchanges, given the lack of property rights in that country, aligned with the genocidal tendencies of Xi and his cronies.

However, sometimes needs must, and Hotbit was one of the few exchanges that used to immediately list many of the original BTC hard forks such as GOD (Bitcoin GOD). My attitude to hard forks was always to sell as soon as possible, a strategy that has undoubtedly maximised my income from hard forks.

It was also sometimes a useful place to sell Coinbase Learn and Earn rewards such as OXT (Orchid), when they were not listed on Coinbase or Coinbase Pro.

News now reaches us that Hotbit has suspended all withdrawals, cancelled all trading orders, and closed out all leveraged trades (how’s that unlimited liquidity claim looking now?)

The reason, however, is not that Hotbit is in financial difficulties, or at least they have not admitted to such. The firm has said that a former employee is under investigation for criminal activity, and as a result the authorities have frozen the exchange’s funds:

https://hotbit.zendesk.com/hc/en-us/articles/8074249353495-Announcement-on-the-Suspension-of-Hotbit-Website-Service

There is something about this press release which does not ring true. I expect there is rather more to this story that would appear at first.

You will be relieved to know that following my rule that over 90% of my crypto portfolio is in cold storage using Ledger Nano X, and that the only exchanges on which I leave any material amount of cryptos for trading purposes are Binance and Coinbase, the total value of my residual holdings on Hotbit is … 56 pence.

I can just about take that hit if I must.

I would be surprised if any of the CCC community – who are well-versed in the dangers of leaving cryptos on a centralised exchange – had any significant funds remaining at Hotbit.