📌 MUST READS

Dormant Whale Wallets Are Waking Up

Every once in a while, something really weird happens in crypto. Sometimes this takes the form of meme coins pumping to the moon for no apparent reason. Other times its multiple prominent crypto CEOs resigning in quick succession. Other, other times, its exchanges accidentally transferring millions to unsuspecting and undeserving customers.

Now, we can add a new situation to the “what the heck is happening” list.

Multiple dormant whale addresses are waking up and moving funds around. By dormant addresses, we’re talking wallets that haven’t moved a muscle in over a decade. And by whales, we mean people with addresses containing tens to hundreds of millions of dollars in crypto.

So yeah, definitely a “what the heck is happening” situation.

What’s going on? Is it a coordinated scheme by veteran whales to dump on us innocent retail investors? Is it a mass hack? Something else?

Let’s investigate.

A Brute Force Hacking
One popular theory for the sudden whale awakening is a massive hack of an old wallet generator.

Wallet generators are the tools that generate seed phrases for wallets. This is crucially important because seed phrases are how wallets are secured. If a hacker figures out your seed phrase, you can kiss your digital coins goodbye.

Unfortunately, sometimes these wallet generators aren’t as random as they should be. This leads to a combo of seed phrases that are more likely than others, which is much easier to brute force hack (using a computer to guess the seed phrase over and over until it eventually guesses it).

Considering that all the wallets being activated are very old, it is quite possible that the wallet generator used to generate their seed phrases was recently hacked. Perhaps it even has something to do with the LastPass hack or Apple vulnerability.

A Mysterious Drain
Another possible explanation is the mysterious wallet-draining operation uncovered by Taylor Monahan, the founder of MyCrypto, a wallet manager for ETH.

What Taylor found is that since December 2022, over 5000 ETH has been drained among the wallets of crypto veterans for no apparent reason. Nobody can figure out why this is happening, how it’s happening, or who is making it happen.

It would make sense that longterm holders are spooked and perhaps making changes to their security before they are a victim.

This is a tough one to prove because nobody knows how this hack is being done, but considering that the victims in both cases are veterans, there is some potential here.

Gox And Silk Road
Also in the realm of possibility is that these moves have something to do with the infamous crypto exchange Mt. Gox and dark web marketplace Silk Road.

Even without knowing too much about current events, this theory does make intuitive sense. Mt. Gox and Silk Road both lived and died in the very early days of crypto, with Silk Road being shut down in 2013 and Mt. Gox closing in 2014. This explains a) how these wallets could obtain so much bitcoin and b) why they were dormant for so long.

Moreover, the Mt. Gox payouts started back in March. Even if these wallets don’t have anything to do with those directly, it is possible that old whales are waking up to react to the repayments. Relatedly, the Feds seized billions in missing Silk Road bitcoin back in November 2021, and have stated that they would be dumping those findings this year. Why they would sell now and not back in November 2021 when the price of bitcoin was at all-time highs is anybody’s guess.

Overall, this is a fun theory, and one that is actually quite plausible. The only problem with this theory is that dormant ETH holders are also waking up, and neither Mt. Gox nor Silk Road had any involvement with Ethereum.

A Story To Follow
Ultimately, we’ll never know for sure what’s going on until one of the wallets comment publicly. But that lack of clarity doesn’t mean you shouldn’t pay attention to these moves.

As we said before, these are wallets with massive amounts of coins. If they decide to suddenly dump their holdings, the prices of our digital assets are going to take a hefty hit.

Until the reason for these moves is confirmed, we recommend:

What It Means For You
Beyond the novelty of whale’s moving their coins and the questions that naturally arise (like, how have they been able to hold on for this long?!), you might be wondering how this actually impacts you.

The truth is, if you are holding for the long term, it really doesn’t.

But if you are someone that is interested in short term price movements, dormant whale’s moving their coins can create volatility in the market. That’s because these coin movements can lead to fear that large tranches of tokens are about to be sold, thus causing the price to go down.

In the end, we suggest simply being a whale watcher and ignoring the short term volatility that their movements cause.

SPONSORED

Get Started in Real Estate Investing Today – It's Easier Than You Think

Are you interested in investing in real estate, but don't know where to start? With Ark7, anyone can get started at just $20, with no prior experience required. Investors can earn passive income by purchasing fractional shares of high-yield rental properties. With a wide variety of property types, rental options, and locations to choose from, investors can easily diversify their portfolios and create one that aligns with their specific needs.

With this approach, investors can avoid the labor and expertise required to locate good property deals and manage them once acquired. As a result, investments can be truly passive, relieving all headaches. Additionally, their platform enables investors to distribute their investments over time, providing them with greater flexibility.

Investors don't have to wait to start building a diversified real estate portfolio and earning passive income with Ark7. With a Trustpilot rating of 4.5 out of 5, Ark7 has helped thousands of investors enjoy their real estate returns.

🔍 DEEP DIVES

Crypto Projects To Watch: An Introduction To Music NFTs

At one point or another, we’ve all imagined ourselves as a rock star. And why wouldn’t we? Musicians rake in a ton of cash, get to travel the world performing in front of thousands of adoring fans, and seem to live awesome lives.

While that may be true for the Drake’s and Taylor Swift’s of the world, the reality for most musicians is much bleaker. The vast majority of artists and bands live a lifestyle that would make fast food workers squirm. Forgot millions, even ‘successful’ musical acts are lucky to break even.

The reason for the lack of profits is the rise of streaming. Whereas before musicians could make a decent living selling albums, now they need to rake in 800,000 plays on Spotify a month just to earn the equivalent of $15 an hour. If millions of people aren’t listening to you, you’d be lucky to earn minimum wage.

Well, as is so often the case, crypto fixes this. Specifically, just like how NFTs granted artists a new income stream, they give musicians the potential to make a decent living.

Let’s dive further into how NFTs can revolutionize the music industry.

A Primer On Music NFTs
A music NFT is like any other NFT in the sense that it is a unique token on the blockchain. What makes a music NFT unique, however, is that the token is linked to either a song, an album, a music video, a concert ticket, or merchandise. Basically, anything that a musician can sell.

Music NFTs enable artists to reclaim ownership of their music through a unique and profitable way to interact with their fans. They also allow fans to have a way to support their favorite artists, earn exclusive prizes, and potentially make money if the price of the NFT rises.

In essence, music NFTs decentralize the music industry by shifting the balance of power from the streaming companies and record labels back to the artists.

It also gamifies the industry by presenting a gambling-addicted public with the opportunity to turn a profit.

In theory, it’s a perfect combo for industry disruption.

Some Music NFT Projects
Although no music NFT project has yet taken off to the extent of an OpenSea or Bored Ape Yacht Club, there are several exciting projects currently being built:

1.) Sound: Sound is a collaborative music platform founded by the son of the president of SiriusXM with investments from a16z and 21 Savage. Sound aims to replicate the emotional concert experience online by making the release of new music something fans partake in and look forward to.

Musicians sell a predetermined amount of Sound NFTs in correspondence with the release of a song. The people who buy the NFTs are granted the right to publicly comment about the song on the blockchain, with the idea being that you can raise your musical clout by proving that you found the song or artists first.

Then, NFT collectors can sell their collections on Sound’s secondary marketplace Sound Swap, with the artist collecting a 7.5% royalty.

So far, over 100,000 songs with over $10 million in trading volume have been minted on Sound.

2.) Reveel: Reveel is a decentralized protocol for revenue sharing among creators. In other words, Reveel allows for the building of independent revenue paths outside of the normal model.

For example, artists can create NFTs that automatically share primary and secondary sales revenue with their collaborators, in essence turning them into a decentralized record label.

This is especially useful in the new age of AI-generated music, because as Grimes points out, this can be used to share royalties between AI music producers and artists.

3.) Showtime: Showtime is a web3 social network for artist NFTs. The company creates a virtual economy where fans can collect, trade, and earn rewards for supporting their favorite artists.

The company achieves this by gamifying the experience with the potential of free NFT rewards for supporting artists. So far, this has proven to be a pretty successful model, with over 1.8 million free NFTs claimed.

4.) Royal: Founded by Justin Blau (3LAU), Royal is a music NFT marketplace where users can buy and sell percentages of songs as NFTs to earn royalties.

On Royal, artists choose what percentage of a song’s royalties to drop, along with any other exclusive benefits they wish, such as exclusive tracks, tickets, or merchandise. Then, when users invest in songs on Royal, they receive an NFT signifying their ownership over a portion of that song’s streaming rights. As that song gets streamed, users earn royalties alongside the artist.

Royal’s attracted a ton of attention from investors, raising a $16 million seed round in 2021 led by Founders Fund and Paradigm and a $55 million Series A led by a16z and including musicians The Chainsmokers, Nas, Logic, and Kygo less than three months later.

Of course, these are not the only four music NFT projects, with other notable participants including the marketplace Catalog, the music aggregation platform Spinamp, the token-gated community Audius, and Mastercard’s music pass NFT.

Looking Ahead
Due to the brutal NFT bear market, music NFTs have yet to take off. But, there is cause for optimism:

For these reasons, music NFTs are a niche worth watching.

SPONSORED

$17.7 Billion Year Highlights Safe Haven Asset

For 2023, investors have one New Year's resolution: Stop. Losing. Money. From “transitory” inflation, to millennial Bernie Madoff, 2022 was a wild ride in the markets. That is, except for one market.

The blue-chip art market. In fact, art auctions hauled in nearly $18 billion in 2022. The best year ever in a 277-year old market – all while financial markets tanked.

Now you’re probably wondering: “That's great, but how can someone like me get in on the action?” The answer is easily, with Masterworks.

Masterworks securitizes artworks by qualifying offerings with the SEC, allowing YOU to invest in shares of multi-million dollar paintings by names like Banksy.

Masterworks has also built a solid track record with all 11 of their exits netting a profit, the last 3 realizing +13.9%, +35.0%, and +10.4% net returns each.

CoinSnacks readers can skip the waitlist to join here.

See important Reg A disclosures at masterworks.com/cd.

TWEET OF THE WEEK

Other Content You Might Enjoy

ABOUT COINSNACKS

Launched in December 2017, CoinSnacks is home to the longest continuously running crypto newsletter. Each week, we publish our cryptoasset musings to an audience of ~60,000 crypto enthusiasts and investors.

In a space flooded with new projects, research, and narratives, the average investor may feel overwhelmed or confused. CoinSnacks offers a solution by doing the digging for you, so you don't have to spend hundreds of hours sifting through the noise.

REACH OUR AUDIENCE

If you’re a brand interested in partnering with CoinSnacks to find your next customers, parter, or ally, we’d love to hear from you. Learn more here.