What happened this week?

Unexplained Outflows Over $130 Million Trigger Security Concerns for Multichain Bridge

The Multichain bridge, operating on the Fantom network, has experienced significant, unexplained token outflows. The total value of the withdrawn tokens exceeds $130 million, including $58 million in USDC stablecoins, 1,020 wrapped bitcoin ($30.9 million), 7,200 wrapped ether ($13.7 million), $4 million in DAI, and others such as Chainlink, Curve DAO, YFI, and UniDex. Similar activity has occurred on Multichain's Moonriver bridge and the Dogechain blockchain, with the same destination wallet implicated.

The tokens have not been sold or moved further, raising suspicions of a potential security breach. In response, the Fantom Foundation stated that it's actively evaluating the situation, with no comment yet from Multichain. LayerZero's recent addition of four tokens, mirroring those moved, sparked questions about its potential involvement. However, Bryan Pellegrino, CEO of LayerZero, insisted this was unrelated to his platform.

Notably, Multichain, formerly Anyswap, was exploited in 2021 and has faced technical difficulties recently, further complicated by the disappearance of its CEO, Zhaojun. While some crypto projects assure their communities of no impact, the crypto sphere waits for a clear explanation for these unusual token movements. Multichain recommends suspending the use of services and revoke all  contract approvals related to Mulitchain.

U.S. Macro Numbers

The U.S. Bureau of Labor Statistics has released the latest Employment figures on Thursday 06.07.

The number of Americans filing for unemployment benefits saw a slight increase last week, but the labor market remains strong as private payrolls surged in June. The reports indicate that the duration of unemployment for laid-off workers is decreasing, and the job market is showing signs of confidence as more people are voluntarily leaving their jobs. Despite a drop in job openings in May, they are still significantly higher compared to pre-pandemic levels.

The data suggests that the Federal Reserve might resume raising interest rates due to the positive outlook of the labor market. The initial claims for state unemployment benefits increased by 12,000 to 248,000 for the week ending July 1. However, claims relative to the labor market size are below the level that would indicate a significant slowdown in job growth. The labor market's tightness is expected to continue its upward trend unless there is a significant change in supply and demand. The stock market was trading lower, the dollar remained stable, and U.S. Treasury prices fell.

On Friday Nonfarm Payrolls will be released and the official unemployment rate will be announced. At the time of writing Fed funds futures are pricing in a 25bps hike for July with 92.4% probability, this would leave the Fed funds rate inch closer to the year-end level the Dot plots projected.

ETF Saga

Valkyrie, a firm headquartered in Nashville, Tennessee, has resubmitted its application for a Bitcoin exchange-traded fund (ETF) following the US Securities and Exchange Commission's (SEC) expression of dissatisfaction with the initial documentation. In the renewed filing, Valkyrie disclosed that Nasdaq had entered into a surveillance-sharing agreement with Coinbase, which would provide market oversight for the proposed Bitcoin fund. The incorporation of market surveillance is seen as pivotal in obtaining SEC approval for a spot Bitcoin ETF, as it significantly diminishes the occurrence of fraudulent activities and market manipulation. Valkyrie's decision to secure a surveillance-sharing agreement with Coinbase, a prominent participant in the US market, is regarded as a noteworthy advancement. Historically, the SEC has rejected approximately 30 spot Bitcoin ETF applications, primarily due to concerns surrounding market manipulation.

The competition for Bitcoin ETFs gained momentum subsequent to BlackRock's re-submission of a comparable ETF in mid-June. Numerous other companies have likewise submitted or resubmitted applications for spot products, with the hope that the SEC's longstanding perspective on the matter will be reversed. Previously, the SEC had authorized ETFs linked to Bitcoin futures and more recently approved a leveraged Bitcoin-futures fund. The possibility of a spot ETF being approved elicits enthusiasm among cryptocurrency enthusiasts, as it would result in increased accessibility for ordinary investors. These expectations have contributed to a surge in the cryptocurrency market, with Bitcoin exhibiting a growth of over 10% within the past month and an impressive 80% since the commencement of the year.