Bitcoin struggles below $40K: Grayscale outflows, options expiry, and Fed in focus

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We have brought together the past week’s most exciting events in this Good Crypto digest. If you want these updates as soon as we post them, follow us on Twitter.

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crypto scam bites dust: Crowd Machine ordered to pay $20 million

In a major blow to the crypto community, a California court has ordered Crowd Machine and its parent company, Metavine, to pay over $20 million in disgorgement, interest, and penalties. The ruling stems from a 2018 ICO for Crowd Machine Compute Tokens (CMCT) that the U.S. SEC deemed “fraudulent and unregistered.”

Crowd Machine promised to revolutionize the way we use computing power by rewarding users with CMCT tokens for sharing their processing resources. However, the project never materialized. CMCT tokens never became operational, and founder Craig Sproule allegedly misused and lost a staggering $5.8 million of the $33 million raised in the ICO.

The SEC filed suit against Sproule and Crowd Machine in January 2022, and the recent court ruling marks a decisive victory for investors. Sproule was fined $195,000 and ordered to shut down CMCT and delist it from the sole cryptocurrency exchange it was listed on. The companies were also ordered to disgorge the following amounts:

• Crowd Machine: $19,676,401.27 + $3.4 million in prejudgment interest
• Metavine: $5 million

Additionally, both companies were hit with civil penalties of $600,000 each.

Bitcoin struggles below $40K: Grayscale outflows, options expiry, and Fed in focus

Bitcoin’s price is stubbornly stuck below $40,000, defying analyst predictions and raising concerns about a potential downtrend. This week’s $4.5 billion options expiry could be a pivotal moment, but the odds seem stacked against the bulls.

The recent GBTC conversion to a spot ETF triggered a wave of selling, causing outflows and dampening Bitcoin’s momentum. Some analysts blame Grayscale’s hefty 1.5% annual fee for spooking investors, pushing them towards cheaper alternatives.

Moreover, Bitcoin’s disconnect from the thriving U.S. stock market suggests specific factors are holding it back. Rising Treasury yields and expectations of a prolonged Fed rate hike make fixed income investments more attractive, reducing incentives for riskier assets like Bitcoin.

Ultimately, the massive $4.5 billion options expiry on Jan. 26 paints a picture of excessive optimism. Open interest for call (buy) options far outweighs puts, suggesting many investors expected a price surge after the spot ETF approval. However, the recent dip caught them off guard, leaving their bets potentially worthless.

Mt. Gox gears up for Bitcoin and Bitcoin Cash repayments

Mt. Gox, the once-mighty crypto exchange, is nearing the long-awaited Bitcoin and Bitcoin Cash repayments. Creditors have received emails confirming their identity and account details on exchanges like Bitstamp and Kraken, paving the way for cryptocurrency payouts.

While Bitstamp users are largely confirmed, Kraken users may have to wait a bit longer for verification. Interestingly, Bitstamp, despite shutting down Canadian operations, will continue servicing local accounts involved in the Mt. Gox settlement.

This follows the December 2023 launch of bank account repayments, marking a significant step towards resolving the 2014 hack that sent shockwaves through the crypto world. Mt. Gox plans to repay 142,000 Bitcoin and 143,000 Bitcoin Cash alongside 69 billion Japanese yen by October 2024.

For many creditors, this is a long-awaited closure to a tumultuous chapter. The verification process is a crucial step, ensuring accurate and timely distribution of the recovered funds.

crypto win: Socket recovers $2.3M from hack!

Socket, a cross-chain bridge protocol, pulled off a major comeback after attackers stole $3.3 million in ETH. They managed to recover a whopping $2.3 million, offering hope to the 219 affected users.

The hack exploited a vulnerability in user approvals, draining funds until limits were reached. Socket quickly identified and patched the bug, restoring the bridge within 24 hours. A big shoutout goes to on-chain analysts who helped track the stolen funds.

However, the ordeal wasn’t over. Phishing scams emerged, prompting Socket to warn users against rogue links and apps claiming to offer approval revoking services.

This incident highlights the delicate balance in the world of cross-chain bridges: their crucial role in connecting blockchains versus their vulnerability to attacks. Despite the setback, Socket’s swift recovery is a positive sign for the DeFi ecosystem.

Momentum Oscillator zero line crossover strategy

The “Zero Line Crossover” is a basic but effective strategy for using the Momentum Indicator to trade cryptocurrencies and other assets. It simply involves watching for when the indicator crosses the zero line.

Here’s how it works👇:

• Price crosses above Zero Line? Bullish signal! 📈 The upward momentum suggests potential for further gains.
• Price crosses below Zero Line? Bearish signal! 📉 Downward momentum could lead to price drops.

However, not every crossover is gold. To avoid false signals:

• Use a longer MOM period. This smooths out short-term fluctuations and reduces false crossovers.
• Consider the overall market trend. Don’t just follow MOM blindly against the market tide.
• Look for confirming price patterns. Combine MOM with other technical indicators for stronger signals.

🪄 This simple MOM strategy, with a dash of caution, can give you valuable insights into potential moves of digital assets. Remember, practice and backtesting are key to mastering any trading strategy.

Master the MOM indicator with GoodCrypto – read the full guide & level up your trades!

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