Newsletter Volume 57
THE MARKET THIS WEEK
The Chief Technology Officer of Sushi, a decentralized finance (DeFi) protocol, has issued a cautionary statement regarding a potential industry-wide exploit related to Ledger’s Connect Kit. Ledger provides this software to various DeFi protocols, including Lido, Metamask, Coinbase, and Sushi, enabling the connection of decentralized applications (dapps) to its hardware wallets. The exploit involves compromising the front end of a website or application, allowing hackers to manipulate user interfaces and trick individuals into sending funds to the attackers’ wallets instead of their intended destinations.
A trader in the crypto market has reportedly turned an initial $1,000 investment into well over $100,000 by investing in a memecoin called Dogwifhat (WIF). The memecoin, which features a dog wearing a beanie as its mascot, debuted on the Solana blockchain’s DeFi markets in late November. The significant profit made by the trader exemplifies the return of speculative retail investment, often referred to as “dumb money,” to the crypto markets.
Gary Gensler, the Chair of the U.S. Securities and Exchange Commission (SEC), hinted at a potential shift in the regulatory approach to spot Bitcoin exchange-traded products (ETFs). Gensler mentioned that the SEC is reevaluating its stance, considering recent court decisions, particularly referring to a Grayscale-related case. The agency is reportedly reviewing eight to twelve pending spot Bitcoin ETF applications, indicating a possible change in strategy based on court rulings.
BlackRock, a major investment firm, has made changes to the mechanics of its proposed spot Bitcoin ETF, potentially opening doors for Wall Street banks. In the revised setup, authorized participants (APs) in the ETF ecosystem can now create new fund shares using cash rather than being restricted to cryptocurrency. This adjustment could allow highly regulated U.S. banks, such as JPMorgan or Goldman Sachs, to participate as APs in BlackRock’s ETF, despite their limitations in directly holding cryptocurrencies due to regulatory constraints.
KEY METRICS
Total Crypto Market Cap : $1.68 T
Bitcoin Market Cap : $834.13 B
Ethereum Market Cap : $272.01 B
ETH/BTC Ratio : 0.05
Ethereum Gas Price : 105 gwei
DeFi TVL : $69.36 B
Fear and Greed Index : 70 (Greed)
Federal Reserve Balance Sheet : $7.79 T
Weekly Spotlight on IC15
The global cryptocurrency market demonstrated resilience, swiftly recovering after a recent downturn, possibly fueled by discussions around the potential approval of a spot Bitcoin ETF. The IC15 Index witnessed a notable uptick, gaining 1,071 points to reach 54,523. Major cryptocurrencies within the index, including Solana and Cardano, experienced significant gains, while Torrential Slide was the sole loser, down by 0.18%. This resurgence follows a period of profit-taking and reflects the market’s responsiveness to ETF-related developments.
India remains cautious about crypto and Web3 regulation, with indications that the country may not introduce related legislation until mid-2025. Meanwhile, in the UK, there is a shift in political strategies, as ‘The Other Party’ movement emerges to promote transparency in the democratic process using blockchain technology. In the conservative executive debate in the US, official candidate Vivek Ramaswamy discusses the need for a regulatory framework for the crypto industry in the country.
Central banks worldwide are actively exploring digital currencies and their implications. Singapore and China collaborate on the digital yuan, allowing tourists in both countries to use the currency for added convenience. Taiwan concludes its wholesale CBDC study, seeking input for the next phase. Flipkart, a major Indian e-commerce player, partners with Polygon to explore the Web3 space. These initiatives reflect the growing intersection of traditional businesses with blockchain technology.
The global cryptocurrency market experienced a sharp decline amid profit bookings, with the IC15 Index down 1,690 points to 53,379. Notable contributors to the downturn included Chainlink, Litecoin, Polkadot, and Uniswap. This downward trend was reversed as markets anticipated key events, such as the US Federal Reserve policy decision and inflation data release. Despite temporary setbacks, the market’s resilience suggests ongoing interest and responsiveness to macroeconomic factors and regulatory cues.
Regulatory developments are evident in various regions. South Korea’s Financial Supervisory Service proposes new rules for the crypto industry to protect investors. Meanwhile, China’s Blockchain-based Service Network (BSN) plans to use blockchain technology for identity verification of its vast population. In the financial sector, BlackRock revises its spot Bitcoin ETF application, making it more accessible for large US banks to participate as authorized participants. These regulatory measures and collaborations underscore the evolving landscape and efforts to bring clarity and security to the cryptocurrency ecosystem.
BATTLE OF THE BULL AND BEAR
In the realm of cryptocurrency predictions for 2024, Bitwise’s senior research analyst, Ryan Rasmussen, foresees a bullish trajectory for Bitcoin, expecting it to reach a new all-time high of $80,000. Furthermore, Rasmussen predicts a significant milestone for stablecoins, anticipating that their settlement volume will surpass that of Visa payments. Stablecoins, considered one of crypto’s “killer applications,” have experienced remarkable growth, with their trading volume surpassing $5 trillion by the second quarter of 2023. This aligns with VanEck’s projection of the total stablecoin market cap reaching $200 billion by the end of 2024.
Bitcoin’s resilience and its recovery above $42,000 indicate a sustained bullish sentiment, buoyed by the anticipation of a spot Bitcoin exchange-traded fund (ETF) approval in January 2024. Despite external factors such as the settlement between Binance and the U.S. Department of Justice, Bitcoin exchange trading volume has reached a six-month high. Ongoing macroeconomic factors, including Federal Reserve decisions and inflation data, continue to play a crucial role in influencing Bitcoin’s performance. Meanwhile, a correction in Ether’s price prompts questions about its ability to regain bullish momentum.
The cryptocurrency market has been closely watching the performance of altcoins, particularly XRP, which experienced a surge after a legal victory against the SEC but has since settled. Investors, initially optimistic about sustained upward momentum, are now more cautious. Ether faces uncertainties as traders question whether the Ethereum network can reignite bullish momentum following its recent correction. The decline in leverage and open interest in ETH futures contracts suggests a shift in market dynamics.
Bitcoin’s resilience and recovery above $41,000 amid concerns about Binance’s settlement indicate a market focused on potential positive catalysts, notably the potential approval of a spot Bitcoin ETF. The market seems to have absorbed negative news without witnessing a mass exodus of funds, and both retail traders and institutional investors continue to hold a significant portion of the total available Bitcoin supply. The market’s reaction to U.S. macroeconomic data and the upcoming Federal Reserve decisions underscores the dynamic and responsive nature of cryptocurrency markets.
The cryptocurrency market remains dynamic, influenced by a combination of price predictions, market trends, and regulatory developments. The ongoing narrative around stablecoins, Bitcoin’s resilience, and the evolving outlook for altcoins highlight the multifaceted nature of the crypto landscape. As the market navigates various factors, including regulatory clarity and institutional participation, stakeholders continue to closely monitor developments that could shape the trajectory of cryptocurrencies in 2024 and beyond.
Weekly Spotlight
1. Security Concerns and Trading Success:
The Chief Technology Officer of Sushi, a DeFi protocol, has raised alarms about a potential industry-wide exploit related to Ledger’s Connect Kit. This software, utilized by various DeFi protocols, is susceptible to a front-end exploit that could deceive users into sending funds to malicious wallets. Meanwhile, a crypto trader reportedly turned a $1,000 investment into over $100,000 by speculating on the memecoin Dogwifhat, underscoring the return of speculative retail investment, often termed “dumb money,” to the crypto markets.
2. Regulatory Shifts and BlackRock’s ETF Update:
Gary Gensler, the Chair of the SEC, hinted at a potential regulatory shift regarding spot Bitcoin ETFs, considering recent court decisions and reviewing pending applications. BlackRock, a major investment firm, modified its proposed spot Bitcoin ETF mechanics, enabling Wall Street banks to play a key role as authorized participants. This change allows banks, restricted from directly holding cryptocurrencies, to participate in BlackRock’s ETF by creating new fund shares with cash.
3. Crypto Market Predictions and Resilience:
Bitwise’s senior research analyst, Ryan Rasmussen, predicts Bitcoin to reach a new high of $80,000 in 2024, highlighting the anticipated growth of stablecoins, with their settlement volume poised to surpass that of Visa payments. Bitcoin’s resilience and recovery above $42,000 suggest sustained bullish sentiment, driven by expectations of a spot Bitcoin ETF approval. Ether faces uncertainties following a price correction, questioning its ability to regain bullish momentum.
4. Market Dynamics and Altcoin Performance:
The crypto market’s dynamics are influenced by a combination of price predictions, market trends, and regulatory developments. Bitcoin’s resilience and the evolving outlook for altcoins, such as XRP and Ether, demonstrate the multifaceted nature of the crypto landscape. Investors remain cautious as they navigate the volatile market, responding to various factors, including regulatory clarity and institutional participation.
5. Global Regulatory Landscape and Central Bank Initiatives:
Regulatory developments are observed globally, with South Korea proposing rules for crypto investor protection, and China’s Blockchain-based Service Network (BSN) using blockchain for identity verification. Central banks worldwide, including Singapore and China, are actively exploring digital currencies. The market’s response to key events, such as Federal Reserve decisions and inflation data releases, highlights the dynamic and responsive nature of cryptocurrency markets.
