Macro: Sandcastle economics
Invest wisely in Q3 2024: Discover SaxoStrats' insights on navigating a stable yet fragile global economy.
You can access both of our platforms from a single Saxo account.
Crypto Weekly: A hackers paradise
Mads Eberhardt
Cryptocurrency Analyst
Summary: Another hacker was active this week hacking a Japanese exchange for more than $90mn worth of cryptocurrencies. Meanwhile, the US State Department started to offer rewards paid in cryptocurrencies for information about hackers targeting US infrastructure. Lastly, Robinhood got increasingly dependent on cryptocurrency trading in Q2 to generate revenue.
Hack costs Liquid Global more than $90mn
The Japanese exchange Liquid Global suffered a major hack last week, where hackers stole more than $90mn worth of crypto-assets. The incident comes the week after the blockchain interoperability protocol called Poly Network was hacked, letting the hacker run away with $610mn before choosing to return the assets to the protocol. In contrast to the Poly hack, the funds stolen from the Liquid exchange have not been returned yet. According to on-chain analysis company Elliptic, the hacker used decentralized exchanges shortly after the hack to convert Ethereum tokens into Ether to avoid having the tokens frozen, which happened for the Poly hackers. Following that move, the hacker used an Ethereum mixer called Tornado Cash to obscure the blockchain pathway of the funds. This makes it fundamentally more challenging for prosecutors, brokers, and exchanges to follow the Ether on the blockchain. These moves by the hacker essentially indicate that the person in question has no intention of returning the assets to the exchange. These hacking events are boosting the sentiment for those who have distrust of cryptocurrencies, making notably institutions and regulators cautious.
US State Department offers rewards in cryptocurrencies
Staying within hacking but jumping to the other side of the table, the US State Department is now offering rewards paid in cryptocurrencies for information about hackers targeting US infrastructure and other criminal activities. For many decades, the US government has been paying out rewards in return for information on the grounds of their Rewards for Justice program. After quietly introducing the option to be paid in cryptocurrencies last month, the option was widely announced some weeks ago at the cyber conference Black Hat in Las Vegas, which gathers a substantial number of white hat hackers (hackers with good intentions). The option to be paid in cryptocurrencies comes after several notable hacks explicitly targeted US infrastructure like the colonial gas pipeline earlier this year. The new option indicates that the US State Department assumes they can gather new information from informants who earlier were not willing to hand out information to the US government. This is potentially one of the more concealed ways the US government can benefit from crypto-assets.
41% of Robinhood’s Q2 revenue came from crypto
The US-based stock, options, and cryptocurrency broker Robinhood announced its Q2 2021 result last week. Publicly trading under the ticker HOOD, the broker generated a revenue of $565mn, of which $233mn came from cryptocurrency trading. Most surprisingly, more than 60% of funded Robinhood accounts traded cryptocurrencies during the quarter. In particular, Dogecoin trading was popular among Robinhood traders as 62% of the company’s revenue from cryptocurrency trading came from Dogecoin. These key figures indicate that the company is at present highly dependent on cryptocurrency trading to generate revenue, in particular a meme cryptocurrency like Dogecoin. The company acknowledged this by stating: “If demand for transactions in Dogecoin declines and is not replaced by new demand for other cryptocurrencies available for trading on our platform, our business, financial condition and results of operations could be adversely affected”. For the quarter, Robinhood reported a net loss of $502 million.
Latest Market Insights
Quarterly Outlook 2024 Q3
Sandcastle economics
-
-
Bonds: What to do until inflation stabilises
Discover strategies for managing bonds as US and European yields remain rangebound due to uncertain inflation and evolving monetary policies.
-
Equities: Are we blowing bubbles again
Explore key trends and opportunities in European equities and electrification theme as market dynamics echo 2021's rally.
-
FX: Risk-on currencies to surge against havens
Explore the outlook for USD, AUD, NZD, and EM carry trades as risk-on currencies are set to outperform in Q3 2024.
-
Commodities: Energy and grains in focus as metals pause
Energy and grains to shine as metals pause. Discover key trends and market drivers for commodities in Q3 2024.
Disclaimer