SeptemBear

Gm. Did you know crypto was kind of already a concept back in the ’80s? The TL;DR of our recent “how was that 2 hours?” rabbit hole: David Chaum invented the first peer-to-peer, privacy-preserving digital cash in 1982 and proposed something pretty similar to the existing Bitcoin blockchain. Satoshi, is it you?

Today: LUNC’s comeback, dispatches from D.C., and the September Effect. Let’s jump right in.

—Vincent & Angelina

LUNC Rises From the Ashes

In comebacks (as in life), you’re either Vanilla Ice or you’re Adele. You either miss the mark entirely, or you exceed every expectation. In the case of Terra Luna Classic (LUNC), we’re gravitating towards the former. The details:

• Earlier this summer, LUNC hit an all time low. But in the months that followed, it rallied over 3,000%, culminating in a 200% surge in the last two weeks alone. By this morning, LUNC had come off its Friday highs by about 40%.

• Still, that qualifies LUNC as one of the top-performing large market cap coins in September.

A quick refresher: Following the cataclysmic collapse of Terra (LUNA) in May, Terra’s founder Do Kwon launched a new chain under the same name in an effort to save the Terra ecosystem. Meanwhile, the original chain was rebranded Terra Classic (LUNC) and is now community-led.

What caused the price rally? Two things:

1. Terra Classic’s new staking service went live at the end of last month, and according to Staking Rewards, LUNC stakers are rewarded with an APR of 37.8%—one of the highest annualized yields in crypto. With that, users have staked more than 633 billion LUNC against its net supply of 6.9 trillion, effectively removing 9.2% of total supply out of circulation.

2. Terra Classic community members approved a 1.2% burn tax on all on-chain transactions to further increase LUNC’s scarcity. The burn tax is set to go live on September 20.

Our POV: Are the new measures enough for LUNC to regain both its lost value and investors’ trust? Probably not. Terra Classic is a skeleton of a failed project. Staking and burn rate mechanisms don’t address the blockchain’s major issues—virtually no on-chain activity and irreparable reputational damage.

The recent Terra Classic hype is no indicator of its revival. At this point, we’ve filed LUNC under “meme coins.” Because at the end of the day, this really does look like a gamble.

Dispatches from D.C.

As the planet heats up, so does crypto regulation in Washington. Last week, the White House called on federal agencies including the EPA and Energy Department to develop new standards to govern crypto’s impact on the environment.

The background: This report suggested that executive action, Congressional legislation, or the limiting (or banning) of high energy intensity consensus mechanisms for mining are on the table.

A silver lining: The report looked favorably on miners who use flared and vented methane from natural gas extraction sites to operate machines. The White House noted that mining operations at these sites convert methane to less harmful carbon dioxide.

Meanwhile over at the Treasury Department: Coinbase is joining the first legal challenge to the U.S. Treasury’s recent sanctions on Tornado Cash. The case hinges on whether the U.S. can sanction recurring code for national security purposes.

Coinbase is standing up for its own interests, noted CoinDesk columnist David Morris. With plans to engage in Ethereum staking in the future, Coinbase risks engaging with sanctioned addresses should the Treasury’s Tornado Cash efforts stick. Worth noting—Coinbase is still under SEC investigation…which makes its decision to take a swing at the Treasury Department all the more interesting.

Wake Me Up When SeptemBear Ends

September to-do list: Play Green Day, mentally prepare for autumn, moan about bear markets.

Historically, markets of all kinds perform badly in September—a phenomenon commonly referred to as the “September Effect.” It’s not just TradFi—with an average drop of 7.5% during the month, crypto markets have closed out 9 of the last 12 Septembers in the red.

Your case for optimism: Despite the doom and gloom of upcoming CPI readings and interest rate hikes, this month could buck the trend. It all comes down to the Merge—its success could act as a positive catalyst for Ethereum-based DeFi and dApp projects. But should the Merge fail…we could be staring down a market much scarier than SeptemBear alone.

In other news:

• Vitalik Buterin went to the Kyiv Tech Summit as a show of support for Ukraine.

• Bitcoin’s correlation with stocks has increased again.

• SEC Chair Gary Gensler said bitcoin should be regulated by the CFTC.

• For the first time, Chainalysis (with the help of law enforcement) has recovered stolen cryptocurrency from North Korea-linked hackers.

• Crypto markets see a flood of Queen Elizabeth memecoins and NFTs following the monarch’s death.

And that’s what you need on your crypto radar today. We hope—like the markets—you can rally again on Friday for another roundup of the most important stories in crypto. See you then.