Ethereum’s most popular software client, Geth, has issued a hotfix to a high-severity security issue in its code. 

The release, titled Hades Gamma (v1.10.8), was posted to the Go Ethereum GitHub at 07:08 UTC Tuesday. Details of the attack vectors and their fixes weren’t disclosed “to give node operators and dependent downstream projects time to update their nodes and software,” according to a posting on the release page.

Ethernodes.org reports that nearly 75% of nodes on Ethereum run Geth. All these users are encouraged to upgrade immediately to the latest version of Geth, v.1.10.8. 

Guido Vranken, a software developer who specializes in finding code vulnerabilities in open-source software, announced he discovered the bug on Aug. 18. 

As stated in an early GitHub security advisory post, the vulnerability in Geth could cause a node to no longer be able to process blocks on Ethereum.

The last time a fix for a bug in Geth code was released, it caused a temporary chain split on Ethereum. Due to a deliberate lack of communication from Geth developers about the bug, several computers, also called “nodes,” did not upgrade their Geth client to the fixed implementation, which resulted in a blockchain consensus failure in November 2020. 

The Geth developer team said in a post-mortem blog post at the time that not speaking publicly about the security vulnerability was aimed at delaying any potential attacks on node operators who needed more time to upgrade to the latest version.

This time around, Geth developers emphasized in advance the urgent need for all users of their software to upgrade to the latest version, but the initial announcement on Aug. 18 did not explicitly describe the nature of the vulnerability.

“Last time we did a hotfix, people were angry that we didn’t announce it. This time we decided to try it differently. Let’s see which works better,” tweeted Geth developer Péter Szilágyi about Tuesday’s code release. 

Major Ethereum-based wallets and services such as Infura have publicly announced on Twitter their support for this new Geth release.

Business analytics software provider MicroStrategy (NASDAQ: MSTR) has added another 3,907 bitcoins to its vast trove of the original cryptocurrency.

• According to a Tuesday filing with the U.S. Securities and Exchange Commission, the company spent about $177 million on its latest BTC (-1.87%) purchase, at an average price of approximately $45,294 per coin.
• In total, the firm holds 108,992 BTC, according to a tweet from CEO Michael Saylor:

• MicroStrategy’s stock, which some investors use as a proxy for the price of bitcoin, has sunk from a high of $1,273 per share in March to $718 as of press time.
• The price of bitcoin is down 2% over the last 24 hours, changing hands at $49,191.30 at time of publication.

The abrupt withdrawal last week by VanEck and ProShares of proposals for ether (ETH, -2.96%) futures exchange-traded funds (ETF) bodes well for the U.S. Securities and Exchange Commission soon approving a bitcoin (BTC, -1.99%) futures ETF, according to Bloomberg Intelligence’s ETF analyst James Seyffart.  

• VanEck and ProShares both pulled their applications just two days after filing them, suggesting the SEC reached out to the issuers and indicated an ether futures fund was not likely to be approved, Seyffart wrote in a note on Tuesday.
• But the fact that both companies’ bitcoin futures ETF filings, as well as those of several other firms, remain active is a positive for their prospects, according to Seyffart. He expects at least one bitcoin futures ETF to launch in the U.S. in the fourth quarter, perhaps as soon as October.
• Many of those bitcoin futures ETFs were proposed after SEC Chairman Gary Gensler indicated recently that he would look more favorably upon bitcoin ETFs that only trade bitcoin futures contracts. 
• If eventual bitcoin futures ETFs are able to operate successfully, and open interest and volume in ether contracts continue to rise, Seyffart said he believes it won’t be long before ether futures ETFs are approved by the SEC.

Data from major exchanges – Deribit, LedgerX, Bakkt, OKEx, and CME – shows that open interest on options rose above $1 billion, surpassing the previous all-time high of $970 million registered on Feb. 14, according to crypto derivatives research firm Skew. 

The metric has increased sharply from the low of $410 million observed in March when the bitcoin market crashed on “Black Thursday,” March 12.

Deribit, the world’s biggest crypto options exchange by volume, contributed nearly 90% of the total on Thursday as open positions on the Panama-based exchange reached a record high of $903 million.

Global options trading volume also jumped to $213.7 million yesterday, the highest level since the March 12 crash, while bitcoin itself clocked a two-month high of $10,062 on CoinDesk’s Bitcoin Price index. At press time, bitcoin had dropped back to near $9,830, representing a 1.5% drop on the day, but an over 10% gain on a week-to-date basis. 

Options are derivative contracts that give the buyer the right, but not the obligation to buy or sell the underlying asset at a predetermined price on or before a specific date. A call option gives the purchaser the right to buy, while the put option gives the buyer the right to sell. 

Open interest refers to the number of options contracts that have
been traded but not yet liquidated by an offsetting trade or an exercise or
assignment. While open interest represents the number of contracts open at a
given point of time, trading volume refers to the number of contracts traded
during a specific period. 

The surge in open interest looks to have been caused by increased demand for put options, or bearish bets.

“Post-March crash, put options have been bought for downside protection primarily. As the market has rallied, more interest has entered via increased put accumulation,” said Tony Stewart, a derivatives trader and analyst in Deribit’s Market Insights channel. 

Validating Stewart’s argument is the one-month put-call skew’s recent rise from -3% to 9.1%. The positive figure indicates that put options are costlier due to drawing greater demand than calls. Similar sentiments are being echoed by the put-call ratio, which rose to a 10-month high of 0.81 on Monday, according to Skew data. 

The put bias seen in the options market suggests investors may be hedging for a potential post-halving price drop. Bitcoin is set to undergo its third mining reward halving on Tuesday, following which the reward per block mined will drop to 12.5 BTC to 6.25 BTC. 

That the supply-altering event is a long-term bullish development has been extensively discussed by the analyst community for many months. Bitcoin’s price has rallied by nearly 160% since bottoming out at $3,867 in March and has recently decoupled from traditional markets as hype over the event mounts. 

Such strong rallies ahead of major events are often followed by price pullbacks. Historical data shows the cryptocurrency suffered a 30% drop in the four weeks following its second reward halving, which took place on July 9, 2016. 

“We may see the market drop by 25%-35% from the peak, but we expect it to be followed by a period of range-bound trading over a number of months and then a gradual move back up. The longer-term horizon for bitcoin is extremely bullish but in the short-to-medium term, we think we’ll see a lot of disappointed players out there,” said Ed Hindi, CIO of Tyr Capital Arbitrage SP, which focuses on liquidity provision and arbitrage within the cryptocurrency markets.

Hence, it’s not surprising that trades are buying hedges (puts)
against long positions in the spot or futures market. 

Bitcoin is widely expected to remain bid over the weekend due to “FOMO” buying from retail investors. FOMO, or fear of missing out, refers to panic buying in a rising market. 

Until the halving has passed, more price rises look likely. “$10,000 has already been breached and the psychological resistance of that has been overcome. We are keeping our eye on $10,500 as the next key level,” said Matthew Dibb, co-founder of Stack, a provider of cryptocurrency trackers and index funds. 

Although bitcoin (BTC, -1.95%) broke out to a three-month high over $50,000 on Sunday, trading volume hasn’t picked up, according to Arcane Research. 

The seven-day average real BTC trading volume is still around $5 billion, less than half of what the market witnessed the last time bitcoin was at $50,000, Arcane Research analysts wrote Tuesday in a report. 

If trading volume continues to be relatively flat and bitcoin prices push higher, the market could become exhausted and the rally won’t be sustainable, the analysts said.

“We have not seen the desired spike in volume with this latest move higher for the bitcoin price, which could indicate that we’re not ready for $50,000 just yet,” the report stated. 

“This means there’s not a lot of interest from traders to get engaged,” said Patrick Heusser, head of trading at Crypto Finance. “This is typical range-trading behavior.

“Either we break out of the range or some news will be the catalyst for a larger move,” he said. 

Matthew Blom, global head of trading at digital-asset firm Eqonex, said that “as lovely, timely and wonderful as this rally has been, the headwinds of the Fed, $50,000, and the muted effect of PayPal announcing their entrance into the U.K. market, could put it on ice.” 

Bitcoin blockchain activity also has remained anemic as the bitcoin price recovered, Arcane Research analysts noted, saying that “the number of active addresses is still far from the top levels seen during the hype of early 2021.”

That’s despite signs that market sentiment has climbed along with the price: “Extreme greed is back, the fear is gone for now, and the market is optimistic,” Arcane Research analysts wrote. In July, the index was registering a reading of “extreme fear.” 

That meant these were, as many observers were happy to point out at the time, unregistered securities offerings, leading to a series of crackdowns by the U.S. Securities and Exchange Commission and other regulators. Many of those enforcements took three or four years to work their way to a judgment or settlement, which sometimes reached into the millions of dollars, even when no outright fraud was alleged.

So if you’re a non-fungible token maker, you might reasonably hear a nagging voice in the back of your head wondering: Am I going to wake up three years from now to the Securities and Exchange Commission knocking on my door?

First, a caveat: I’m not a lawyer, and those who are will spend plenty of billable hours giving authoritative answers to questions about NFT regulation. But I have been reporting on financial regulation for a while, which is about the best definitely-not-legal-advice you can expect for free on the web.

Anyway, here’s the good news: Most NFTs currently circulating are almost certainly not securities. A security is generally defined as a claim on the future proceeds from the work of others, while an NFT is usually the product of work that has already been undertaken. The closest and most obvious comparison is to a painting: even if you buy it because you think the value of the thing will go up, you still only bought the thing itself, rather than any sort of secondary claim. The SEC is unlikely to take much interest.

Which makes it all the more strange that a good number of NFT series or adjacent projects are going out of their way to turn their nice little non-security collectibles into things the SEC would definitely take an interest in.

The most straightforward way that NFTs can become subject to SEC oversight is through fractionalization. Fractionalizing an NFT means allowing multiple investors to buy portions of it, instead of one person or entity having to own the whole thing. With CryptoPunks in particular regularly reaching multimillion dollar valuations, the appeal of just owning a piece of one as an investment is clear (even if to my mind it’s against the spirit of the entire endeavor, on which more in a bit). At least one marketplace, Fractional.art, is pursuing the idea.

We already know that such efforts are within the purview of the SEC. We know because there are already significant companies, particularly Masterworks, which fractionalizes physical art for investors. Masterworks registers its offerings with the SEC, though the company is not a registered broker. Nominally that’s because it is primarily an issuer – though it seems to be running a public over-the-counter board for art shares on its website, so I guess that’s also fine? Seems weird to me but, again, I’m not a lawyer.

But there are other NFTs that are moving even more clearly into securities territory, particularly by offering revenue distributions to current holders. Two examples are Buzzed Bears and Lazy Lions, which both attach certain governance rights to ownership. That, according to the projects, can include the right to redistribute the profits from future sales to current holders. Buzzed Bears even has a staking system that lets you “hibernate” your bears to increase returns, and the organizers are promising to sell merchandise to fill a DAO controlled by holders, so … yeah, that’s probably a security, baby.

It should be said that these are worthy experiments, part of the potential of NFTs to be something weird and novel. You can build a lot of features into them, and a lot of those are interesting. Most obviously, the idea that owning an NFT can get you special access to an artist or band has a lot of potential.

But it will be a complicated and likely messy process to determine the boundary between “an NFT with some cool secondary features” and “an NFT that is definitely a security.” And by “messy” I mean “the SEC might sue some people.” The projects on the market now are likely too small for any such attention (Lazy Lions’s initial sale netted a reported $380,000), but I’d wager we’re about to see much bigger targets given the market’s vibrancy.

And here’s the other thing: These security NFTs may cause pro

lems down the road for the individual issuers, but they’re even more likely to become a problem for NFT marketplaces like OpenSea. You need a special license to sell securities, and it comes with all sorts of more or less burdensome requirements about tax reporting and the like. OpenSea could certainly get that registration, plenty of crypto projects that aren’t nearly as big have done it. And the various regulatory requirements, while burdensome, are certainly doable.

The bigger loss, I think, would be to the spirit of the NFT mania. One reason it’s fun is that, yeah some people are “investing” and getting rich, but it’s also all just kind of a big goof, and in many cases a genuinely creative process. OpenSea and other NFT markets have the feel of a playground, and that’s what makes it fun, and – here’s the real catch – the fun is what makes it valuable, both monetarily and just as a human activity. Turning that into just another batch of algorithmic internet money-beans would be a downgrade.

Blockstream has raised $210 million in a Series B funding round that values the bitcoin technology firm at $3.2 billion and will fund an expansion into manufacturing mining chips.  

U.K. investment management firm Baillie Gifford and iFinex, the parent company of cryptocurrency exchange Bitfinex and stablecoin issuer Tether, participated in the round, Blockstream said Tuesday. No other investors were mentioned.

Blockstream also said it had acquired the intellectual property and key employees of Israeli bitcoin mining hardware manufacturer Spondoolies for undisclosed terms.

The move paves the way for Blockstream, based in Victoria, British Columbia, to build out a business line making specialized mining chips known as ASICs, the Canadian company said.

The acquisition, together with the additional funding, will advance Blockstream’s crypto mining products and services, including its recently announced Blockstream Energy service.

The new capital will also further the firm’s Bitcoin-focused financial products as well as its Liquid sidechain network, according to the company.

ASIC ambitions

Now is a “most opportune time” to accelerate growth, Blockstream Chief Strategy Officer Samson Mow told CoinDesk via Telegram on Monday.

“The fresh infusion of capital will allow us to launch more products under Blockstream Finance, as well as bring our new bitcoin ASIC miner to market next year,” said Mow.

Blockstream was founded in 2014 with a focus on building infrastructure and applications based upon the Bitcoin network. The firm was co-founded by CEO Adam Back (inventor of Hashcash, a system for discouraging spam emails that influenced Satoshi Nakamoto’s proof-of-work consensus mechanism design for Bitcoin) and nine others, including Bitcoin Core developer Gregory Maxwell.

The firm’s Series A round, completed in 2016, was led by AXA Strategic Ventures, the venture capital arm of French multinational insurance firm AXA Group; Digital Garage, the Tokyo-based online payments firm co-founded by Joi Ito; and Hong Kong VC firm Horizons Ventures. AME Cloud Ventures, Blockchain Capital and Future\Perfect Ventures also participated in that earlier round.

Bitcoin’s dizzying bull run is showing no signs of slowing down despite an uptick in U.S. government bond yields.

The cryptocurrency market leader set a new lifetime high of $51,348 early Wednesday, having penetrated the psychological level of $50,000 on Tuesday for the first time, according to CoinDesk 20 data. Prices have risen by 53% this month alone.

The latest move higher comes on the heels of an announcement by public listed company MicroStrategy that it plans to boost its bitcoin (BTC, +5.24%) stash yet again. The firm announced a $600 million debt sale on Tuesday, which will fund the additional purchases. The business intelligence firm has been buying bitcoin since August 2020 and is sitting on a profit of more than $2 billion on its holdings.

According to Avi Felman, head of trading at BlockTower Capital, MicroStrategy’s announcement may have been timed to force a break above the critical level of $50,000. The firm made a similar announcement on Dec. 7, following which bitcoin crossed above the then major hurdle of $20,000.

It remains to be seen if the latest move above $50,000 is sustainable, given that U.S. bond yields are rising and pushing gold lower. Bitcoin is widely considered a hedge against inflation like gold.

The yield on the 10-year Treasury note clocked a 12-month high of 1.33% early today and has risen by over 20 basis points this year. Gold is currently trading at a two-week low of $1,790 per ounce. Bitcoin, however, is showing resilience, and may come under pressure if and when real or inflation-adjusted yields rise.

As of Tuesday, the 10-year bond was yielding -1% in inflation-adjusted terms, according to data provided by the U.S. Department of the Treasury.

‘”Momentum funds who bought bitcoin as a hedge against inflation might sell if real yields rise,” Felman told CoinDesk.

Perceived store-of-value assets typically move in the opposite direction to real bond yields. For instance, gold rallied more than $600 to a record price of $2,075 in the five months to August, as the U.S. 10-year real yield fell from 0.55% to -1.08%. Bitcoin has charted a staggering rally over the past 11 months alongside a continued drop in yields.

However, yield rises may be limited, with the Federal Reserve running an open-ended bond purchasing program and inflation likely to get a lift from rising oil prices.

At press time, bitcoin is trading around $50,946, up 3.6% in 24 hours.

NewsSource: CoinDesk

Fees for transacting on the Ethereum network breached previous records, passing above $20 for the first time Thursday.

• As of 05:45 UTC, the average and median transaction fee on Ethereum reached as high as $23.43 and $11.77, respectively, data from Blockchair indicates.

• Ethereum last broke its transaction fee record a month ago on Jan. 11, hitting an average $19 per transaction. Current values double the peak transaction fees recorded during “DeFi Summer” of 2020.
• The increase in fees correlates with the general price run ether (ETH, +5.44%) has enjoyed since the New Year. The CoinDesk 20 places year-to-date returns on the digital asset at 130%.
• The increase in the cost of transacting on the Ethereum network also reflects growing demand for ERC-20 based tokens, particularly stablecoins and the red-hot decentralized finance (DeFi) sector.
• Led by tokens like uniswap (UNI) and aave (AAVE), DeFi’s total market capitalization is up 16.37% in 24 hours, according to Messari.
• Ethereum miners have been a primary beneficiary of the fee spike. The industry earned some $830 million in ether last month with 40% attributed from fees alone.

NewsSource: CoinDesk