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Distributed Ledger: Bitcoin starts clawing back from 3-month downtrend, but may not be out of the woods yet, analysts say

Hello! Welcome back to Distributed Ledger, our weekly crypto newsletter that reaches your inbox every Thursday. I’m Frances Yue, crypto reporter at MarketWatch, and I’ll walk you through the latest and greatest in digital assets this week so far. Find me on Twitter at @FrancesYue_ to send feedback or tell us what you think we should cover.

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Crypto in a snap

The crypto market recovered some of its losses from earlier this year. Bitcoin
BTCUSD,
+0.69%

rose 20.5% over the past seven days, recently trading at around $45,000. Ether
ETHUSD,
-2.87%

gained 21.5% over the past seven trading sessions to around $3,168.

Meme token Dogecoin
DOGEUSD,
-2.88%

notched a 15.9% gain over the past seven sessions, while another dog-themed token Shiba Inu
SHIBUSD,
-3.10

surged 60.9% in the same stretch.

Crypto Metrics

Biggest Gainers

Price

% 7-day return

Smooth Love Potion

$0.04

323.6%

Gala

$0.35

86.6%

Kadena

$9.4

73.6%

Shiba Inu

$3.9

56.6%

Leo Token

$6.41

54.6%

Source: CoinGecko as of Feb.10

Biggest Decliners

Price

% 7-day return

cUSDC

$0.023

-0.5%

Dai

$0.998

-0.1%

Pax Dollar

$1

-0.1%

Source: CoinGecko as of Feb.10

Bitcoin rebounds

For the past seven days, bitcoin’s price rose from around $36,700 to about $45,000. 

The cryptocurrency started to claw back from a 3-month downtrend that has persisted since bitcoin’s all-time high in November, according to Thursday notes by bitcoin company NYDIG. 

Martha Reyes, head of research at crypto exchange Bequant, said she is “less convinced” that bitcoin’s price is out of the woods yet, but sees its long-term potential.

The volume of bitcoin trading has been much lower than that of spring last year, Reyes noted. “Everyone’s waiting for regulation,” Reyes told Distributed Ledger in an interview. “That could be one of the biggest concerns out there: to get more clarity on regulation. And we might get that sooner rather than later.”

On trading volumes, retail participation hasn’t fully recovered due to the market selloffs, according to Reyes. “I think we need some catalysts unique to the space.”

Furthermore, investors haven’t seen any “big, directional moves” in the funding rates for bitcoin perpetual futures, as they fluctuated between the positive and negative territories, Reyes notes. A positive funding rate is usually seen as bullish, as investors are willing to pay in the long position, while a negative funding rate is usually a bearish sign.  

DOJ seizes $3.6B in bitcoin from Bitfinex hack

​​The U.S. Department of Justice said it recovered $3.6 billion in bitcoin stolen in a 2016 hack of the crypto exchange Bitfinex, the agency’s largest financial seizure in history, MarketWatch’s Lukas Alpert reported. 

A couple, Ilya Lichtenstein, 34, and his 31-year-old wife, Heather Morgan, were arrested Tuesday on charges of conspiracy to commit money laundering and to defraud the U.S. government. Prosecutors said they traced the stolen funds of about 120,000 bitcoins through a labyrinth of transactions to several crypto wallets controlled by the couple. 

At the time of the theft, the stolen bitcoins were worth around $71 million. With bitcoin’s price surge, their value rose to about $4.5 billion.  

The arrests and financial seizure show that “cryptocurrency is not a safe haven for criminals,” deputy attorney general Lisa O. Monaco wrote in a statement Tuesday.

“As hackers continue to target businesses and individuals, this case demonstrates how the permanent record left by the blockchain can assist in recovery,” blockchain data platform Chainalysis wrote in Tuesday notes. 

Read more: New York hipster couple charged in billion-dollar bitcoin heist were ‘serial entrepreneurs’ who used startups to launder money, prosecutors say

Super Bowl: bullish for crypto?

Super Bowl 2022 will kick off on Sunday. Be prepared to see crypto-related ads.

Cryptocurrency exchanges, such as FTX and Crypto.com, are planning to run ads at the championship game of the National Football League. Bitcoin prices are still more than 30% below all-time highs.

“I get really bullish on seeing stuff like that, because, to me, the cycle of cryptocurrency is all about adoption,” David Martin, product manager at crypto-trading platform Falcon X told MarketWatch in an interview.

“The more people see, hear the words, the platforms, the players that are in this space, the more that it’s going to spark curiosity,” Martin said.

That’s one way of seeing it. Los Angeles Rams wide receiver Odell Beckham Jr. might be feeling less bullish, after causing a stir last November when he announced plans to convert his $750,000 salary for 2021 into bitcoin. The cryptocurrency’s slide this year likely has been costly.

Keep in mind that crypto companies also are paying millions of dollars for the Super Bowl ads in an effort to grab “market- and mind-share both from competitors and future participants, retail investors in particular, who may be on the fence or who may have an interest in participating in crypto ecosystem in the near future should market conditions match their risk/reward appetite,” according to R.A. Farrokhnia, professor at Columbia Business School.

While ads might help raise brand awareness, Farrokhnia urged caution.

“Running ads to engage in what still is mostly speculative trading of relatively complex technical and financial instruments is very different than running ads to convince viewers to buy more consumer goods or switch from one brand to another,” Farrokhnia said.

“If you think back to mid- to late 90s, ads alone did not lift the fortunes of online brokers (E*Trade, Scottrade, etc.) — they rose and fell in large part in correlation with how markets behaved in general,” according to Farrokhnia.

Read more: Welcome to the ‘crypto Super Bowl’: crypto ads to run during the big game for the first time

Crypto companies, funds

Shares of Coinbase Global Inc.
COIN,
-2.01%

were down 2.5% to $209 Thursday afternoon. It was up 17.9% for the past five trading sessions. Michael Saylor’s MicroStrategy Inc.
MSTR,
-0.16%

traded 1.4% higher on Thursday to $452.98, and has surged 35.5% over the past five days.

Mining company Riot Blockchain Inc.
RIOT,
+0.55%

shares gained 3.7% to $20.33, with a 37.5% gain over the past five days. Shares of Marathon Digital Holdings Inc.
MARA,
+2.04%

rose 5.6% to $30.65 and are up 44.5% over the past five days. Another miner, Ebang International Holdings Inc.
EBON,
+23.91%
,
jumped 31.5% to $1.8, contributing to a 55% gain over the past five days.

Overstock.com Inc.
OSTK,
-3.44%

traded 2.1% lower to $51.8. The shares went up 12.8% over the five-session period.

Block Inc.
SQ,
+1.29%
’s
 shares are up 2.8% to $116, with a 14.4% gain for the week. Tesla Inc.
TSLA,
-1.66%
’s
shares traded down 1% to $923, while its shares logged a 3.6% for the past five sessions.

PayPal Holdings Inc.
PYPL,
-1.56%

inched 1% to $121.72, while it recorded a 2.2% loss over the five-session stretch. NVIDIA Corp.
NVDA,
-1.70%

lost 1.1% to $264.22, and was looking at a 10.3% loss over the past five days.

Advanced Micro Devices Inc.
AMD,
-3.67%

went down 3.7% to $127.9, while the shares went up 6.5% over the past five trading days, as of Thursday afternoon.

In the fund space, ProShares Bitcoin Strategy ETF
BITO,
-0.12%

was 0.5% higher at $28.36 Thursday, while Valkyrie Bitcoin Strategy ETF
BTF,
-0.23%

was up 0.6% at $17.57. VanEck Bitcoin Strategy ETF
XBTF,
+0.72%

rose 1.2% to $44.69.

Grayscale Bitcoin Trust
GBTC,
-1.71%

was trading at $32, off 0.2% Thursday afternoon.

Must Reads

Binance, led by the world’s richest crypto billionaire, is taking a $200 million stake in Forbes (CNBC)

Crypto is like the 1990s internet, nearing a hyper-adoption phase, Wells Fargo says (MarketWatch)

Crypto is volatile, but KPMG Canada just added bitcoin and ether to its balance sheet. Here’s why (MarketWatch)

CFTC Chair Asks Congress for Authority to Regulate Some Cryptocurrencies (Wall Street Journal)

Russia to Regulate Crypto, Dispelling Fears of Ban (CoinDesk)

Bitcoin has become a lifeline for sex workers, like this former nurse who made $1.3 million last year (CNBC)

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