Bitcoin has surged past $40,000 and the cryptocurrency market is rapidly recovering.

The price of Bitcoin (BTC) has surpassed $40,000 on May 26, breaking above a key sell area for the first time in five days.

Traders expect a broader rally to come and a bullish market structure to form if Bitcoin continues to rise above $42,000 and Ether (ETH) reclaims $3,000. 

$42,000 and $49,000 are key resistance levels

Bitcoin has been recovering over the past week due to three major factors.

First, Tesla CEO Elon Musk and MicroStrategy CEO Michael Saylor have been encouraging Bitcoin miners to use cleaner energy.

Musk and Saylor have gone further since, speaking with Bitcoin miners in the United States about reliable energy consumption.

Spoke with North American Bitcoin miners. They committed to publish current & planned renewable usage & to ask miners WW to do so. Potentially promising.

— Elon Musk (@elonmusk) May 24, 2021

Second, the Bitcoin futures market reset to a large extent. According to the data from Bybt.com, when BTC crashed to below $30,000, the futures market open interest dropped from $27 billion to $11 billion.

This means that the futures market is not overcrowded, which raises the probability of a more sustainable and gradual rally.

Third, Ethereum has been rising rapidly over the past few days, which also benefits Bitcoin and altcoins because ETH saw a deeper correction than BTC.

Major cryptocurrencies rebounding as a whole is improving the sentiment around Bitcoin, leading to the gradual recovery of the crypto market.

In the near term, traders say that $42,000 is the important short-term resistance area and after that, $49,000 is the macro sell area.

A pseudonymous trader known as “Pentoshi” wrote:

“Many alts coming into some resistances +/- a 5% We’ve gotten mean reversion as discussed during the nuke However $BTC has been stuck. It started it’s LH trend a month ago. Would like to see Bitcoin pop + 42k or alts likely make their own LH’s and dip again. Clock is ticking.”

What’s important to observe?

In the foreseeable future, the two key things to observe for Bitcoin traders are exchange outflows and the $42,000 level.

Ideally, if the $42,000 level holds and Bitcoin exchange outflows increase in tandem, that would mean that the confidence of investors in BTC and whales at above $42,000 is rising.

There are concerns that a “dead cat bounce” might form, which is a short-lasting recovery, but if BTC holds $42,000, the chance of a fakeout rally would substantially decrease.

Wallet provider Lohko has launched gold-backed NFTs offering carbon offsets.

Digital asset wallet provider Lohko and London-based tech firm Mattereum have teamed up to launch nonfungible tokens, or NFTs, that are backed by gold and have carbon offsets attached.

According to a May 26 announcement the tokens represent ownership over physical gold bars that are stored in a vault in Singapore managed by partner Bullionstar.

Each NFT represents an underlying bar of gold, with both the token and the physical bar of gold sharing a unique serial number. The tokens are also sold with a warranty ensuring NFT’s owner “has full legal rights to redeem the physical gold bar.”

The NFTs have been listed on popular Ethereum-based NFT marketplace OpenSea, with the tokens representing either one ounce of gold, 10 grams of gold, or 100 grams of gold respectively.

One of the 100 gram NFTs also features 3D digital art depicting an animated bull on a gold bar. A version of this token appears to have been first listed on OpenSea for 7 Ether three months ago.

Lohko’s CEO, Antti Saarnio, emphasized the enhanced utility of tokenized gold over its underlying physical counterpart, stating:

“Gold’s main limitation as an investment category has been that its ownership is difficult to transfer […] NFT gold owners are able to sell their gold anywhere and to anyone in any blockchain marketplace. This is a huge benefit for gold investors providing them better liquidity and higher sales margin.”

Lohko is not the first to tokenize gold, with the Perth Mint Gold Token claiming it was the first token backed by “government-guaranteed gold” to launch on a public blockchain in October 2019, while asset manager Coinshares and wallet provider Blockchain teamed up to launch a Swiss gold-backed token on a private Bitcoin sidechain that same month.

In May 2020, centralized crypto asset lending platform Celsius launched its yield product for Tether’s XAUT gold token.

Spot gold last week hit its highest price level since Jan. 8 after dipping to as low as $1,680 in early March.

In the aftermath of the Mid-May crypto market sell-off, gold has seen significant price recovery.

Gold prices continued to inch higher on Tuesday, hitting $1,887 per ounce at 3:00 am EDT, according to data from TradingView.

Last week, gold reached its highest price level since Jan. 8 at $1,889, marking a four-month high after gold prices dipped to $1,681 in early March. At the time of writing, spot gold is trading at $1,882, up around 0.1% over the past 24 hours.

The accelerated growth of the gold market came along with a major downturn in cryptocurrency markets that started on May 12. After topping above $2.5 trillion, the total crypto market capitalization started seeing consecutive slumps, eventually sinking below $1.3 trillion on Sunday, according to data from CoinMarketCap.

According to Bob Haberkorn, a senior market strategist at brokerage firm RJO Futures, growing gold prices could be attributed to a weaker dollar accompanied by lower United States Treasury yields. “If the data comes out substantially better than expected, that would probably be bearish for gold because the likelihood of a Fed taper will be sooner rather than later,” he said.

A number of financial analysts have drawn parallels between the trends in the crypto and gold markets, with JPMorgan experts suggesting last week that large institutional investors were dumping Bitcoin (BTC) in favor of gold.

According to the bank, the new trend reversed a major bullish market driving Bitcoin’s price above $64,000 in mid-April. At the time of writing, Bitcoin is trading at $37,111, rebounding after touching $30,000 last Wednesday.

One blockchain security firm says its audit of the SafeMoon smart contract has unearthed a potential $20 million vulnerability within the viral meme coin.

Popular TikTok viral “meme coin” SafeMoon could be vulnerable to malicious exploits by hackers on account of purported security vulnerabilities in its smart contract code.

According to a smart contract audit by blockchain security firm HashEx, SafeMoon currently has 12 of such vulnerabilities with five being classified as ranging between being of a “critical” and “high-severity” nature.

As part of its findings, the HashEx audit alleges that SafeMoon is vulnerable to a “Temporary ownership renounce” attack and a subsequent rug pull to the tune of $20 million. According to HashEx, the SafeMoon contract owner is an externally owned account, or EOA, that controls a significant proportion of the coin’s liquidity.

In the event of the EOA being compromised either by internal or external rogue actors, an attacker can drain the liquidity pool. Indeed, the HashEx team alleges that a hacker can temporarily override any attempts by the SafeMoon devs to send the tokens to the burn address.

However, the SafeMoon team has countered HashEx’s findings, telling Cointelegraph that contract ownership is securely held. One SafeMoon developer said that the team was aware of the issue has policies in place to ensure that the owner wallet is never connected to any third-party decentralized applications.

Apart from the potential for a $20 million rug pull, HashEx also identified a few reportedly problematic contract set functions that can allow an attacker to exclude certain users from receiving rewards or distribute rewards to a specific wallet.

Under normal conditions, each SafeMoon token sale attracts a 10% fee with half of that sum distributed as rewards for existing holders. However, HashEx alleges that an attacker can set contract functions like fees, and maximum transaction amounts to any value and siphon 100% commissions from each sale.

In effect, during a possible attack, a hacker can steal proceeds from each token sale and redirect same to specified wallets. Indeed, with all of these alleged vulnerabilities in mind, the blockchain security firm says an attacker can synergize these purported loopholes to launch an elaborate chain attack.

Responding to the HashEx audit, Thomas Smith, chief technology officer at SafeMoon said that the team was aware of the issues having already been intimated by its smart contract auditor Certik.

According to Smith, a hard fork will be required to solve many of the concerns raised by HashEx. Echoing the sentiments shared by the previously quoted SafeMoon dev, Smith stated:

“Addressing these other issues, such as ownership renounce being able to be taken back by the contract deployer, we are never going to renounce and have made our stance on that clear in the past. Internally we have policies and procedures around how the contract operates to alleviate risk of mishandling values, however, you will never see us modify fees or maxTx.”

SafeMoon is currently about 69% down from its April all-time high. Indeed, back in April, Cointelegraph reported that market commentators believed the parabolic price rally of the Binance Smart Chain-based project was unsustainable.

BSC-based projects have increasingly become victims of hacks and exploits as decentralized finance protocols sought to make a home on the Binance chain after sustained periods of high transaction cost on the Ethereum network.

As previously reported by Cointelegraph, BSC DeFi protocol PancakeBunny recently tanked 96% following a $200 million flash loan attack. In April, Uranium Finance — another BSC-native protocol — suffered a $50 million malicious exploit.

Michael Saylor has provided more context on the Mining Council, and hopes to combat the anti-crypto narrative with greater Bitcoin mining transparency.

MicroStrategy CEO, Michael Saylor has explained the details and thinking behind the formation of the Bitcoin Mining Council.

The council was formed on May 25 after Saylor brokered a successful meeting between Elon Musk and several top North American Bitcoin mining firms. The miners involved will provide current and planned renewable usage transparency, and will lobby other mining operations across the globe to do so as well

Michael Saylor describing the formation of the Bitcoin Mining Council and @ElonMusk’s shared interest in seeing #Bitcoin succeed: pic.twitter.com/7MfODadi8p

— Documenting Bitcoin (@DocumentingBTC) May 25, 2021

Speaking at the virtual Consensus 2021 conference, Saylor emphasized that the council was formed out of the need to provide greater transparency on the Bitcoin mining industry, and promote sustainable initiatives moving forward:

“The only reason we had the meeting is because we wanted to ensure the success of a decentralized cryptocurrency, and the source of decentralization is energy usage,” Saylor said.

“It turns out that Bitcoin miners don’t actually have a good forum for communicating how they generate their energy. We don’t have a standard model for Bitcoin energy usage right now, and we don’t have a future forecast model that we commonly use.”

However the Bitcoin Mining Council has proven controversial in some quarters with comparisons to the oil production cartel OPEC. Podcaster Marty Bent, the co-founder of Great American Mining, which utilizes wasted gas from energy plants to power its Bitcoin mining operations — drew comparisons to the controversial Bitcoin scaling plans emerging out of the 2017 New York Agreement, in his May 24 newsletter:

“Do they not recall the last time there was a closed door meeting that involved stakeholders who attempted to speak on behalf of an entire industry?”

But Saylor was quick to rebuff notions there was anything clandestine or non-transparent about the meeting. “If it was a secret meeting, I wouldn’t have told millions of people the next day that it was a secret meeting. Trust me, you know, we told everybody in the world that we had a meeting,” he said.

He emphasizing the need to fight back against a hostile anti-cryto narrative portrayed by some institutions and media outlets:

“We need to make sure the people that are hostile to Bitcoin and hostile to the crypto industry aren’t defining those narratives and defining those models and defining those metrics. In the absence of any good information or any response on our part, they will define those models.”

The council is made up of North American miners, including Argos Blockchain, Blockcap, Galaxy Digital, Hive Blockchain, Hut 8 Mining, Marathon Digital, and Riot Blockchain.

Elon Musk’s involvement

Saylor revealed that after a “very long conversation” with Elon Musk, the MicroStrategy CEO reached out to the Bitcoin mining firms and asked if they’d like to meet the entrepreneur. During the “constructive” meeting, the other attendees reportedly asked Musk for advice on how to combat the growing carbon anxiety surrounding Bitcoin:

“We asked Elon for his advice about how we might actually manage concerns in the mainstream. We had a detailed conversation about it. We talked about how we might be able to surface better data. “

Musk’s reported “first-order ask” was “can we come up with a way to publish or create transparency for Bitcoin mining energy usage?” and Saylor echoed this sentiment when he stated:

“I think the first step is, let’s come up with a protocol for us to publish energy information in a way that we can share it with the world and then work together to make sure that we pursue sustainable energy goals.”

It won’t be easy to bring DeFi to be on par with traditional finance, but tokenization can help it along, says Liquefy’s CEO.

Nonfungible tokens could become a bridge to connect the legacy financial system to the emerging fintech world in the near future. During a recent interview, Adrian Lai, CEO of Liquefy — an investment firm and an incubator for decentralized finance platforms — told Cointelegraph China that synthetic assets, NFTs and digital securities are redefining the way capital markets operate. 

Lai especially believes that the value of synthetic assets could give each individual in decentralized finance access to essentially any asset, as long as there is a reliable data feed. This emerging trend between traditional finance and DeFi is inevitable.

Lai also pointed out that as the convergence between security tokens and digital currencies grows greater, we will see increased activity between traditional finance and cryptocurrencies. He added that:

“We are seeing a merger of security tokens, utility tokens and NFTs. NFTs can also now represent real assets, which was not considered several years ago. The convergence of traditional finance and the crypto space is increasing more and more.”

Lai gave centralized exchanges as an example, saying that some of them have been moving beyond the traditional understanding of being simply a trading venue. Platforms like BlockFi and Coinbase offer retail-focused services like savings accounts and crypto payment options — services that make these platforms function like traditional financial institutions, at least partially.

Lai explained that synthetic assets are meant to imitate other investment products. They can combine various derivatives products such as futures, options or swaps to simulate an underlying asset. These underlying assets can include stocks, bonds, indexes, commodities, currencies or interest rates.

Challenges ahead

Although the convergence of traditional finance and the crypto industry is inevitable, Lai believes the current crypto industry still faces challenges such as liquidity exposure and reliable data oracles: “There is simply not enough information in the crypto space. When someone in crypto wants to trade illiquid assets, in many cases, there’s no adequate pricing data and other supportive information on the blockchain to facilitate the trade.”

Lai also pointed out that even though there is a lot of hype around NFTs, the current NFT market is only a digital collectible market, which does not require much liquidity. While Lai believes this collectible market is likely here to stay in the long run, several changes have to be made to help the broader NFT market grow further.

He thinks that breaking down an NFT into several parts for investment purposes could become a new trend for the digital collectible market:

“NFTs could also represent real assets, and creating a fraction of an NFT out of a real asset is a good way to offer traditional finance exposure to crypto. In this case, liquidity is important because you want to trade a fraction of the real asset.”

Tokenizing DeFi

According to Lai, tokenization has previously been primarily done via security token offerings. However, he believes that this will change due to DeFi, as tokenizing assets with DeFi could make tokenization more accessible for everyone:

“While security tokens are backed by real-world assets and their ownership is legally recognized, the liquidity of security tokens can vary, and we’ve seen in many cases that when security token owners want to sell their holdings, they may not be able to execute the trade at the best price.”

Lai believes that the maturation of DeFi and tokenization of real-world assets via DeFi protocols will have more potential than using the traditional security token offering model: “Tokenizing assets in a decentralized fashion opens up much greater liquidity for asset owners. At the same time, it gives real-world assets exposure to all of DeFi’s users.”

As Cointelegraph previously reported, 2021 will likely be a pivotal year for DeFi that will transform the way financial services are used. So, could tokenization also play a part in this?

Roughly $60 billion worth of ETH changed hands over the past 24 hours while BTC saw $50 billion in trade.

Ethereum is seeing renewed interest in the aftermath of Bitcoin’s travails this week, with Ether’s 24-hour trade volume topping BTC’s by a significant margin.

However it’s still a long way from doubling Bitcoin’s volume as some ETH proponents suggested. On May 25, a screenshot of CoinGecko data circulated across Crypto Twitter showing the daily volume of Ether had surpassed $115 billion while Bitcoin’s sat at nearly $53 billion.

Speaking to Cointelegraph, CoinGecko’s co-founder and COO, Bobby Ong, revealed the data depicted in the screenshot was not accurate due to either an API error, or wash-trading, resulting in inflated ETH volumes reported by the EXX exchange.

Ong stated that Coingecko has since disabled its data feed from EXX. The platform now shows Ether has driven 20% more volume than BTC over the past 24 hours with roughly $60 billion trade compared to Bitcoin’s $50.2 billion.

While CoinGecko’s Bitcoin page has seen about 75% more traffic than its Ethereum page over the past seven days, the gap has narrowed significantly in the past 24 hours. Ong noted:

“In the past 24 hours, our Bitcoin page received about 60% more traffic compared to Ethereum. When it comes to search queries, Bitcoin received only about 7% more queries compared to Ethereum.”

The surging trade activity and interest has also coincided with institutional fund manager Grayscale’s Ethereum Trust (ETHE) seeing its premium over spot Ether prices bounce up to 11%. while the firm’s Bitcoin Trust has traded at a discount since March. The data suggests that some institutions have turned their focus to Ethereum rather than Bitcoin.

This is what I mean, $ETH both on spot exchanges and institutional (grayscale) is flippening $BTC in volume

macro Market structure on $ETH is more bullish than BTC too

Look at Goldman’s comments as well as other institutional investors, you can see where the money is flowing https://t.co/v7vZoWNkSk

— Pentoshi wont DM you (@Pentosh1) May 25, 2021

Ethereum’s volume surged to overtake Bitcoin just days after segments of a leaked report from Goldman Sachs revealed the global investment bank believes Ether has a “high chance of overtaking Bitcoin as a dominant store of value.”

The report noted the growth of the burgeoning decentralized finance and nonfungible token ecosystems being built on Ethereum, as well as ETH’s dominance over Bitcoin by total transaction volume.

“Ether beats bitcoin as a store of value. The Ethereum ecosystem…provides developers a way to create new apps. Most of DeFi apps are being built on Ethereum. The greater number of transactions in ether vs bitcoin reflects this dominance” – Goldman Sachs Global Macro Research pic.twitter.com/vNkQ1HlDYM

— SantΞago R Santos (@santiagoroel) May 22, 2021

The Canadian trading and yield app recorded $60 million in revenue for Q1, 2021.

Crypto asset trading firm Voyager Digital has announced financial results for the first quarter of 2021, and they are impressive.

The retail crypto trading and yield platform reported another record quarter, with momentum continuing into the current quarter. Total revenue for the period came in at $60.4 million, more than a 16x increase from $3.6 million over the previous quarter.

The company ended the quarter with an operating profit of $30 million and an adjusted working capital of $197 million. It was the firm’s first-ever quarter of operating profit, Voyager said in an announcement.

Trading volumes have also surged in 2021, leading to a massive revenue boost for the firm. Q1 saw $5 billion of principal volume traded compared to $350 million of principal value traded in the previous quarter.

Newly funded accounts in May have already surpassed the whole month of April, with currently 1.6 million verified users according to Nasdaq.

Voyager’s CEO and co-founder, Steve Ehrlich, stated that the platform’s leading altcoins and interest-yielding asset offerings have gained significant market share.

“Our focus on a wide range of coins has contributed to a long-term economic model with fiscal third-quarter operating margins increasing to 50%. Given our success to date, we anticipate that our operating margin should continue to scale in future periods.”

The Voyager app currently supports the trading of over 50 crypto assets. Ehrlich added that the platform saw exponential adoption of cryptocurrencies as a recognized and investable asset class in March, which translated into significant growth for Voyager.

During the first three months of 2021, Voyager continued to make significant upgrades to its systems infrastructure, and staff with a focus on platform security, scalability, and customer support.

Earlier this year, Voyager’s native token, VGX, saw explosive growth following a number of mergers and acquisitions for the Canadian company. At the time of writing, Voyager Token was trading flat on the day at $2.54 but had lost 23.4% over the past seven days in the market slump.