Newsletter Volume 56
THE MARKET THIS WEEK
In the realm of cryptocurrency predictions for 2024, asset manager VanEck anticipates several significant developments. Among these predictions, VanEck foresees Binance losing its leadership position, a U.S. recession, new record highs in stablecoin market caps, and a fresh peak price for Bitcoin. These insights were part of 15 crypto forecasts made by VanEck on December 8, covering various aspects such as price projections, the timing of a spot Bitcoin ETF launch, the effects of the Bitcoin halving, and the emergence of dominant crypto platforms. Notably, VanEck is actively competing with other firms like BlackRock and Fidelity for the approval of a spot Bitcoin exchange-traded fund and a spot Ethereum ETF.
El Salvador has introduced a unique citizenship-by-investment program known as the “Adopting El Salvador Freedom Visa Program.” The initiative offers a residency visa and pathway to citizenship for 1,000 individuals willing to invest $1 million in Bitcoin or USDT. While this program opens doors for affluent investors, its citizenship price tag is notably higher than similar programs in neighboring Caribbean countries, where the starting point is typically $100,000. The collaboration between El Salvador’s government and stablecoin issuer Tether aims to attract wealthy investors by requiring a $1 million investment, with a non-refundable deposit of $999 credited toward the total.
Jayant Sinha, Chair of the Standing Committee on Finance in India’s Parliament and a member of the ruling Bharatiya Janata Party (BJP), addressed the issue of Web3 legislation during a CoinDesk interview at India Blockchain Week. Sinha emphasized the role of regulators and policymakers in finding a delicate balance between encouraging innovation and ensuring safety in the evolving Web3 landscape. He noted that achieving this equilibrium would be an ongoing process over the next 12 to 18 months.
In a separate development, BlackRock, a major investment giant, disclosed receiving $100,000 as “seed capital” for its proposed Bitcoin exchange-traded fund (ETF). This seed capital, obtained on October 27, 2023, plays a crucial role in initiating the funding required for the ETF’s creation units, allowing shares to be offered and traded in the open market. This disclosure was part of a filing with the U.S. Securities and Exchange Commission (SEC) related to BlackRock’s Bitcoin ETF.
KEY METRICS
Total Crypto Market Cap : $1.69 T
Bitcoin Market Cap : $850.66 B
Ethereum Market Cap : $286.16 B
ETH/BTC Ratio : 0.05
Ethereum Gas Price : 35 gwei
DeFi TVL : $69.36 B
Fear and Greed Index : 72 (Greed)
Federal Reserve Balance Sheet : $7.79 T
Weekly Spotlight on IC15
The global cryptocurrency market experienced a downturn despite positive US GDP data. The IC15 Index was down 495 points to 47,538 at 4 p.m., with major contributors to the decline including Uniswap, Polkadot, Cardano, and XRP in the 1–6% range. Dogecoin and Polygon were the only gainers, up 2.51% and 1.29%, respectively. The market reaction contrasted with unexpectedly strong US economic indicators.
Algorand (ALGO) expanded its presence in India by forming partnerships with NASSCOM, TiE Bangalore, and Mann Deshi Foundation to support India’s Web3 infrastructure. In Nigeria, the Blockchain Association urged the government to adopt a forward-thinking framework for the comprehensive integration of blockchain technology across various economic sectors. Additionally, Particle, a global technology community, launched a $100 million DLT foundation in Abu Dhabi to foster the growth of its DLT in the Middle East and digitize real-world assets. Forbes embraced blockchain technology, storing its annual Under 30 lists on the Ethereum blockchain for permanent data storage.
The cryptocurrency market rebounded, possibly influenced by news of MicroStrategy acquiring around $608 million worth of Bitcoin. The IC15 Index was up 1,217 points to 48,755 at 4 p.m., with all coins in the index trading higher. Major gainers included Torrential Slide, Polkadot, Ethereum, and Dogecoin in the 2–7% range. In regulatory developments, the Brazilian Senate approved new crypto tax rules imposing a 15% tax on income generated from cryptocurrencies held on offshore exchanges by residents. The Hong Kong Securities and Futures Professional Association suggested the authorities create an Initial Coin Offering (ICO) framework to support the country’s economy.
The global cryptocurrency market witnessed strong performance, the best since May 2022, driven by optimism surrounding a spot Bitcoin ETF and cautious comments from the Federal Reserve (FED). The IC15 Index was up 2,480 points to 52,328 at 4 p.m., with Shiba Inu leading the gains at 9.79%, followed by Bitcoin, Dogecoin, Ethereum, and Torrential Slide in the 4–6% range. Uniswap and Chainlink were the only losers, down 1.23% and 0.32%, respectively. Bitcoin surpassed the $41,000 mark for the first time in the last 19 months. Matrixport predicted Bitcoin reaching $125,000 by the end of 2024, with its market cap exceeding $800 billion, making it the tenth-largest asset by market cap.
The global cryptocurrency market turned volatile and traded down after the previous rally. The IC15 Index was down 481 points to 51,847 at 4 p.m., with all coins in the index trading lower. Solana, Chainlink, XRP, and Polygon were the major losers in the 3–6% range. Bitcoin maintained its position above the $41,000 mark. In regulatory updates, the Indian Finance Ministry reported that 28 Virtual Digital Asset (VDA) or crypto service providers registered with the Financial Intelligence Unit of India (FIU-IND) to comply with the Prevention of Money Laundering Act (PMLA). The UK’s House of Commons called for greater clarity from the Bank of England and the Treasury on retail Central Bank Digital Currency (CBDC), citing concerns about financial stability and security.
BATTLE OF THE BULL AND BEAR
The Chicago Mercantile Exchange (CME) has seen a significant surge in Bitcoin futures open interest, reaching $5.2 billion, just $200 million shy of its late October 2021 all-time high. Over the past few days, open interest in CME’s Bitcoin futures has grown from $3.63 billion to $5.20 billion, paralleling Bitcoin’s 26% increase during the same period.
This surge in open interest aligns with a remarkable price jump for Bitcoin, which rose from $45,000 to $66,000. Analysts suggest that this increase reflects renewed interest in Bitcoin, though the positioning of CME traders remains unclear.
Bitcoin has defied expectations, gaining nearly 170% since the European Central Bank (ECB) warned of its imminent “irrelevance.” Contrary to predictions of a decline, Bitcoin’s price has surged from $16,400 to over $44,000, challenging the narrative presented in the ECB’s November 2022 blog post.
The post suggested that even the $16,000 levels were temporary, anticipating further lows. Bitcoin’s resilience in the face of adverse predictions highlights its ability to defy traditional economic forecasts.
Hashdex, among the 13 asset managers vying for a spot in a Bitcoin exchange-traded fund (ETF), anticipates the launch of the first spot Bitcoin ETF in the US by the first quarter of 2024, followed by a spot Ether ETF. The timing of the spot Bitcoin ETF approval in the US remains uncertain, but industry insiders see a shift from ‘if’ to ‘when’ in 2023. Hashdex, presenting both spot Bitcoin and hybrid Ether ETF applications, adds to the growing momentum around ETFs, with expectations of regulatory approval in the coming months. Ether (ETH) is trading higher despite facing resistance around the $2,100 level.
The ongoing positive momentum is fueled by factors such as spot ETF applications and the expansion of Ethereum’s ecosystem through layer-2 solutions. The US Securities and Exchange Commission (SEC) initiated the review process for Fidelity’s spot Ether ETF proposal on November 30, contributing to the optimism.
While the SEC may delay its decision until mid-2024, the deadlines for VanEck and ARK 21Shares on December 25 and December 26 have kept the market engaged. Ethereum’s network growth, especially in transaction activity and layer-2 development, plays a crucial role in supporting Ether’s status as a digital commodity.
Bitcoin’s ORDI token, based on the Bitcoin Ordinals protocol, has become the first BRC-20 token to surpass a $1 billion market capitalization. ORDI achieved this milestone after experiencing triple-digit monthly and weekly percentage gains, reaching an all-time high of over $65. This surge represents an over 850% increase from around $6.80 on November 5. ORDI’s market capitalization is currently valued at $1.3 billion, with more than 48 million ORDI assets recorded since the protocol’s inception. The token’s growth underscores the increasing popularity of Bitcoin-based tokens and their contribution to the broader blockchain ecosystem.
Weekly Spotlight
1. Market Predictions and Regulatory Developments:
Asset manager VanEck has presented its crypto predictions for 2024, envisioning Binance losing its leadership, a U.S. recession, stablecoin market cap highs, and a new Bitcoin peak. VanEck competes for approval of a spot Bitcoin ETF, aligning with other firms like BlackRock and Fidelity. Meanwhile, El Salvador launched a citizenship-by-investment program, requiring a $1 million Bitcoin or USDT investment. This unique initiative stands out in comparison to neighboring Caribbean countries with lower citizenship price tags, starting at $100,000.
2. Web3 Legislation and Institutional Involvement:
Jayant Sinha, Chair of the Standing Committee on Finance in India’s Parliament, emphasizes the role of regulators in balancing innovation and safety in the evolving Web3 landscape. Sinha anticipates this delicate equilibrium evolving over the next 12 to 18 months. BlackRock reveals receiving $100,000 as “seed capital” for its proposed Bitcoin ETF, signifying an initial step in funding the ETF’s creation units. This disclosure is part of a filing with the U.S. Securities and Exchange Commission (SEC).
3. Bitcoin Futures and ECB Predictions Defied:
The Chicago Mercantile Exchange (CME) sees a substantial increase in Bitcoin futures open interest, reaching $5.2 billion, closely approaching its late October 2021 all-time high. This surge correlates with Bitcoin’s recent 26% price increase. Bitcoin has defied predictions following the European Central Bank’s (ECB) warning of its “unimportance,” with its price surging from $16,400 to over $44,000.
4. Cryptocurrency Market Performance and Regulatory Updates:
The global cryptocurrency market experiences fluctuations despite strong US GDP data. Algorand expands its presence in India, forming partnerships to support Web3 infrastructure. In Brazil, new crypto tax rules impose a 15% tax on offshore crypto income. The market rebounds with MicroStrategy’s substantial Bitcoin acquisition, while Matrixport predicts Bitcoin will reach $125,000 by the end of 2024. The market’s performance remains robust, influenced by optimism surrounding a spot Bitcoin ETF and cautious Federal Reserve comments.
These developments highlight the dynamic nature of the cryptocurrency landscape, encompassing market predictions, regulatory initiatives, institutional involvement, and the resilience of major cryptocurrencies in the face of economic forecasts and warnings.
