Memecoins' failure rate

August 02, 2024

Reading time: 5 minutes

MicroStrategy faces $102.6M loss in Q2 due to Bitcoin impairment

Key points:

  • The company's Bitcoin holdings now stand at 226,500 coins, valued at approximately $14.4 billion.

  • MicroStrategy's revenue fell short of analyst expectations.

News - Software giant MicroStrategy reported a significant net loss of $102.6 million for the second quarter, a stark contrast to the $22.2 million profit recorded in the same period last year.

The primary culprit behind the loss was a hefty $180.1 million impairment charge on its Bitcoin holdings, a substantial increase from the previous year's $24.1 million.  

Despite the loss, the company's Bitcoin holdings continue to grow. MicroStrategy now owns 226,500 Bitcoin, valued at approximately $14.4 billion at current market prices.

The company acquired these coins for an average price of $36,821, significantly lower than the current market value.  

While the company's core business operations generated $111.4 million in revenue, falling short of analyst expectations, CEO Phong Le expressed optimism about the future of Bitcoin.

MicroStrategy's stock price experienced a decline following the earnings report, mirroring a broader downturn in both the stock and cryptocurrency markets. However, the company's shares have tripled in value over the past year, largely driven by the soaring price of the king coin.

Pump.fun memecoins face high failure rate despite celebrity endorsements

Key points:

  • Only 1.41% of memecoins created on Pump.fun achieve a listing on Raydium.

  • Experts believe this low rate reflects a decline in the memecoin craze.

News - Data from Dune Analytics reveals a meager 1.41% of Pump.fun tokens manage to get listed on decentralized exchanges. This number hasn't budged much since May, with a historical high of only 2.56% reached in February.

Market expert Adam Cochran, partner at Cinneamhain Ventures, emphasized that even among those launched tokens, none have achieved a significant market cap of $20 million. This suggests a potential decline in the overall memecoin craze.

However, some argue this doesn't reflect the entire memecoin market. Some commentators believe Pump.fun's ease of use simply exposes the high churn rate inherent in the memecoin space.

While most attempts fail, the platform generates significant revenue through transaction fees. Pump.fun reportedly charges 1% until a token reaches a specific market cap, leading to instances where its daily revenue surpassed Ethereum's.

Further contributing to the platform's popularity is the trend of celebrity memecoin endorsements. Personalities like Caitlyn Jenner and Iggy Azalea have partnered with Pump.fun to launch and promote their own branded tokens.

Do Kwon’s extradition to South Korea upheld by Montenegrin Appellate Court

Key points:

  • Kwon faces fraud charges in the U.S. and potential charges in South Korea.

  • Terraform Labs has agreed to a $4.47 billion settlement with the SEC.

News - Terraform Labs co-founder Do Kwon will be returned to his home country of South Korea after a Montenegrin appellate court upheld a previous extradition ruling.

The decision brings an end to a lengthy legal battle over whether Kwon should face charges in the United States or South Korea.

Kwon has been embroiled in legal troubles since the collapse of the Terra ecosystem in 2022. In April, a U.S. court found him liable for fraud in a case brought by the SEC. Terraform Labs subsequently agreed to a $4.47 billion settlement with the regulator.

The decision to extradite Kwon to South Korea comes amid allegations against Montenegrin Prime Minister Milojko Spajic of early investment in Terraform Labs. Spajic has vehemently denied these claims.

With the extradition process now expedited, Kwon will soon face legal proceedings in South Korea related to the collapse of Terra and the subsequent financial losses incurred by investors.

Bybit ceases operations in France following regulatory crackdown

Key points:

  • French regulator AMF blacklisted Bybit for operating without authorization.

  • French users have until 13 August to close open positions.

News - Crypto exchange Bybit has announced its withdrawal from the French market due to escalating regulatory pressure. The decision comes after the Autorité des Marchés Financiers (AMF), France's financial regulator, blacklisted the platform for operating without proper authorization.

Starting 2 August, French users can no longer open new positions or deposit funds on Bybit. All open positions will be liquidated on 13 August. The exchange has faced similar bans in Canada and the UK for regulatory non-compliance.

Despite these setbacks, Bybit remains a prominent player in the crypto industry, ranking second only to Binance in terms of monthly website visits, according to CoinGecko.

The move underscores the increasing scrutiny faced by crypto exchanges globally and highlights the challenges of navigating complex regulatory landscapes.

Did you know?

  • Bitcoin Cash offers faster transaction processing by allowing for larger blocks. Its block size limit is a whopping 32MB, compared to Bitcoin's 1MB limit.

  • Once a year, Ethereum gathers the global blockchain community at Devcon - a conference where developers, researchers, and enthusiasts come together to explore Ethereum's advancements and chart its future course.

  • Polkadot, a brainchild of Ethereum co-founder Gavin Wood, breaks down barriers between blockchains. This multi-chain platform allows different blockchains to communicate and work together seamlessly.

Top 3 coins of the day

Dogecoin (DOGE)

Key points:

  • DOGE was trading at $0.1186, at the time of writing.

  • The daily trading volume has been on a decline.

What you should know - Dogecoin (DOGE) has experienced a significant decline, marked by a six-day down candlestick streak beginning 27 July, resulting in a near 16% drop in value. Historically, Q3 has shown muted performance for DOGE, with an average return of 1.55% and a median of –7.14% over the past decade. Specifically, August has delivered an average return of just 0.28% and a median of –5.23%. Despite the downturn, the technical indicator RSI at 40 suggests that DOGE is close to being potentially oversold, supporting the "buy the dips" strategy. However, given the historical trends and ongoing downtrend, caution is warranted. Investors should closely monitor for signs of stabilization before considering entry points.

Ethereum (ETH)

Key points:

  • ETH ETF inflows failed to push the prices up.

  • The coin was reeling under the selling-pressure, at press time.

What you should know - Ethereum has shown considerable volatility in recent weeks, sparking both optimism and apprehension among traders. After briefly reaching $3,600, ETH has retraced and is currently hovering near a crucial support zone. Recent candlestick patterns reveal market indecision, characterized by small-bodied candles that signal a lack of clear momentum. Key support around $3,000 has historically been strong, but Ethereum also faces near-term resistance near $3,400. The Awesome Oscillator currently displays mixed red and green histograms, though they are quite small, reflecting ongoing uncertainty.

Cardano (ADA)

Key points:

  • Cardano’s price fell by more than 14% in the past 11 days.

  • At press time, ADA was exhibiting signs of further drawdown.

What you should know - Cardano's price action has been volatile since June, with repeated attempts to recover lost ground proving unsuccessful. Currently trading near $0.38, ADA faces a critical support level at $0.37. A breakdown below this could trigger a further decline to $0.34. On the other hand, reclaiming the $0.40 level would signify a potential bullish reversal. However, the overall bearish sentiment and historical price action suggest caution. Investors should closely monitor price movements and be prepared for increased volatility.

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