Newsletter Volume 58
THE MARKET THIS WEEK
Despite its connection to the collapsed FTX exchange and founder Sam Bankman-Fried’s trial, Solana has performed well, gaining momentum after the trial’s conclusion. Bankman-Fried, a major supporter of Solana, acquired over $1 billion worth of SOL tokens. Solana experienced increased monthly active addresses and the launch of memecoins like BONK, recently listed on Coinbase. The network’s survival and thriving activity indicate a newfound appreciation for its innovative technology and successful airdrops.
Looking ahead to 2024 and beyond, industry experts foresee a significant shift driven by advancements in blockchain interoperability protocols. The goal is to break down existing silos between different blockchains, enabling seamless interaction, data sharing, and value transfer. This transformation aims to create a unified and more efficient blockchain ecosystem. Interoperability protocols are deemed crucial for fostering innovation and supporting new applications, particularly in decentralized finance (DeFi).
A British Virgin Islands court has frozen over $1 billion in assets belonging to the founders of the bankrupt crypto hedge fund Three Arrows Capital (3AC). Liquidators from Teneo Restructuring, overseeing the bankruptcy proceedings, sought $1.3 billion. One of the founders, Kelly Chen, was included in the order to maximize returns to creditors, whose claims exceed $3 billion. The bankruptcy occurred following the collapse of stablecoin issuer Terra, leading to irrecoverable losses.
Coinbase-powered blockchain Base has collaborated with blockchain music platform Sound.xyz, enabling artists to mint music as non-fungible tokens (NFTs) within the Base ecosystem. The partnership leverages the Ethereum layer 2 solution, reducing gas fees for minting tracks and facilitating fast transactions. This development allows artists to upload and withdraw without the need to purchase crypto or bridge their funds. Additionally, representatives from BlackRock, Nasdaq, and the SEC have met to discuss rule changes necessary for listing a Bitcoin exchange-traded fund (ETF), marking ongoing efforts to navigate regulatory considerations in the crypto space.
KEY METRICS
Total Crypto Market Cap : $1.74 T
Bitcoin Market Cap : $863.13 B
Ethereum Market Cap : $270.88 B
ETH/BTC Ratio : 0.05
Ethereum Gas Price : 25 gwei
DeFi TVL : $69.36 B
Fear and Greed Index : 74 (Greed)
Federal Reserve Balance Sheet : $7.79 T
Weekly Spotlight on IC15
The global cryptocurrency market exhibited a relatively stable performance following signals from the US Federal Reserve indicating potential interest rate cuts for the next year. The IC15 Index showed a modest increase of 21 points to reach 54,491, with Solana and Avalanche leading gains. However, notable losses were observed in Uniswap, Polygon, Shiba Inu, and Litecoin, ranging from 1% to 3%. This stability followed a week marked by profit booking ahead of the Christmas season, resulting in a dip of 1,918 points to 51,285 on the IC15 Index.
Governments worldwide are engaging with Web3 industry leaders and blockchain experts to explore and implement blockchain technology. In India, the state of Telangana collaborates with Polygon Labs, Bharat Web3 Association, and others to promote blockchain adoption and support startups. In Brazil, President Luis Inácio Lula da Silva signed a new overseas crypto tax bill into law, imposing taxes on Brazilian citizens for crypto held abroad. Russia and China continue to work on their Central Bank Digital Currencies (CBDCs), the digital ruble, and yuan, with plans for payments and transactions in 2024.
Regulatory developments in the cryptocurrency industry include the UK introducing regulations to allow the Financial Conduct Authority (FCA) and the Bank of England to oversee its Digital Securities Sandbox (DSS). This sandbox provides a controlled environment to test blockchain-based products and services. The International Organization of Securities Commissions (IOSCO) released a nine-point policy proposal for decentralized finance (DeFi) to enhance regulatory oversight globally. PwC’s report noted that over 40 countries have made strides toward crypto regulation in 2023, indicating a broader global acceptance of cryptocurrencies.
The global cryptocurrency market responded positively to developments related to a potential approval of a spot Bitcoin exchange-traded fund (ETF). The IC15 Index saw a significant increase of 2,862 points, reaching 54,147. Major cryptocurrencies within the index, including Solana, Avalanche, Cardano, Shiba Inu, and Polkadot, recorded gains in the 6–10% range. Additionally, predictions for 2024 by Bitwise anticipate Bitcoin reaching a new all-time high of $80,000, while stablecoins are expected to surpass Visa in terms of settlement volume. Major financial institutions, such as Akbank and Garanti BBVA in Turkey, are expanding their presence in the crypto industry as the government works on new crypto regulations.
BATTLE OF THE BULL AND BEAR
Coinbase, the largest crypto trading platform in the U.S., has witnessed a resurgence in its stock (COIN) prices, reaching 20-month highs and surpassing $162 on December 19. The company’s performance in 2023 has seen remarkable gains, exceeding 400%. Despite the impending decision on the U.S. spot Bitcoin exchange-traded fund (ETF), Coinbase CEO Brian Armstrong remains optimistic. Armstrong highlighted the company’s role in the crypto value chain and emphasized the importance of countering anti-crypto sentiments in Washington, participating in a fundraising initiative for pro-crypto U.S. election candidates.
Bitcoin (BTC) experienced a brief dip below the 20-day moving average on December 18, but renewed buying interest pushed the price above $43,500. The focus is now on potential further upside, particularly if the first U.S. spot Bitcoin ETF receives approval. Ethereum (ETH) has been engaged in a tug of war between bulls and bears near the $2,200 level. While bears failed to sustain prices below $2,200, the flattish 20-day EMA and the RSI near the midpoint suggest a range-bound action. Both BTC and ETH are closely monitored for potential breakout or breakdown scenarios.
Binance Coin (BNB) demonstrated resilience as it quickly rebounded from a brief dip below moving averages, indicating strong buying support at lower levels. The BNB/USDT pair could potentially rally towards the neckline of a reverse head-and-shoulders pattern, with a breakout target around $333. Solana’s memecoin craze continued as a trader turned $226,000 into over $1.6 million within five days by betting on Dogwifhat (WIF), a canine-themed memecoin on the Solana network. The broader trend of memecoins on Solana has gained momentum, with tokens like Bonk (BONK) achieving significant gains and becoming the third-largest memecoin by market capitalization.
The bankruptcy saga of Singapore-based cryptocurrency hedge fund Three Arrows Capital (3AC) unfolds further as a British Virgin Islands court freezes over $1 billion in assets belonging to founders Su Zhu and Kyle Davies. The court order also affects assets owned by Davies’ wife, Kelly Chen. Teneo, the firm overseeing the liquidation, indicates that 3AC creditors are owed approximately $3.3 billion. The freezing order is sought based on allegations that the founders are responsible for the deterioration of 3AC’s situation.
Solana, despite its association with the collapsed FTX exchange, has shown resilience and gained momentum. The network witnessed increased monthly active addresses and successful memecoin launches. This positive trend contradicted concerns about Solana’s survival after the FTX collapse. Additionally, the broader market dynamics include discussions on blockchain interoperability protocols, regulatory challenges, and the anticipation of a spot Bitcoin ETF approval, contributing to the overall vibrancy of the cryptocurrency landscape.
Weekly Spotlight
1. Solana’s Performance Amid Challenges:
Despite facing challenges related to the collapse of the FTX exchange and the trial of FTX founder Sam Bankman-Fried, Solana has demonstrated resilience in the market. The network experienced a boost following Bankman-Fried’s trial conclusion, with increased monthly active addresses and successful memecoin launches like BONK. Solana’s survival and thriving activity suggest a growing appreciation for its innovative technology and a successful response to high-profile airdrops.
2. Blockchain Interoperability’s Future Impact:
Experts anticipate a significant transformation in the blockchain space beyond 2024, driven by advancements in interoperability protocols. The goal is to break down existing barriers between different blockchains, fostering a unified and more efficient blockchain ecosystem. Blockchain interoperability is deemed crucial for driving innovation, fostering new applications, and supporting use cases, particularly in decentralized finance (DeFi). This transformative shift is expected to mark a major milestone in the evolution of the blockchain industry.
3. Three Arrows Capital’s Bankruptcy and Legal Actions:
A British Virgin Islands court has frozen over $1 billion in assets belonging to the founders of Three Arrows Capital (3AC), a bankrupt crypto hedge fund. This action follows the collapse of the fund after irrecoverable losses linked to stablecoin issuer Terra. The court order, sought by liquidators Teneo Restructuring, aims to maximize returns to creditors, whose claims total more than $3 billion. The founders, Su Zhu and Kyle Davies, are also facing legal actions, including a domestic freezing order from the Singapore Court.
4. Coinbase’s Market Resurgence and CEO’s Advocacy:
Coinbase, the largest U.S. crypto trading platform, has seen a resurgence in its stock (COIN), surpassing 20-month highs and gaining over 400% in 2023. The CEO, Brian Armstrong, remains optimistic about Coinbase’s role in the crypto value chain, despite challenges such as the pending decision on a U.S. spot Bitcoin ETF. Armstrong emphasizes the importance of countering anti-crypto sentiments in Washington, participating in fundraising for pro-crypto U.S. election candidates.
5. Cryptocurrency Market Movements and Regulatory Developments:
The global cryptocurrency market exhibited stability following signals of potential interest rate cuts from the US Federal Reserve. The IC15 Index showed modest gains, with notable performances from Solana and Avalanche. Regulatory developments include the UK introducing regulations for its Digital Securities Sandbox (DSS) and IOSCO proposing policy recommendations for decentralized finance (DeFi). Additionally, PwC’s report highlights progress in crypto regulation globally, with over 40 countries engaging in discussions to pass regulations in 2023. The market’s positive response to potential ETF approval and ongoing regulatory efforts reflects the dynamic nature of the cryptocurrency landscape.
