Newsletter Volume 66
THE MARKET THIS WEEK
Crypto exchange Kraken has moved to dismiss a lawsuit filed by the U.S. Securities and Exchange Commission (SEC) in November, arguing that the SEC’s theory in the case sets a dangerous precedent for its regulatory authority. Kraken filed a motion for dismissal with a San Francisco federal court on Feb. 22, asserting that the SEC’s theory suggests there can be an investment contract without any contractual obligations or interaction between the issuer and the purchaser. According to Kraken, this theory lacks a limiting principle and could grant the SEC extensive authority over commerce, potentially opening the floodgates to private securities law claims.
In a separate development, decentralized finance (DeFi) protocol Blueberry faced an ongoing exploit, prompting the protocol to pause its operations to limit potential damage. The Blueberry Protocol Foundation announced on Feb. 23 that it was working to pause the protocol as quickly as possible and advised users to withdraw their funds from Blueberry lending markets. Users reported difficulties withdrawing funds, and the front end of the protocol was also down, adding to the chaos surrounding the exploit.
Social media platform Reddit disclosed that it invested part of its excess cash in bitcoin (BTC) and ether (ETH), joining the ranks of companies like MicroStrategy and Tesla that have directly purchased digital assets. Reddit submitted a filing with the U.S. Securities and Exchange Commission (SEC) to go public on the New York Stock Exchange under the ticker symbol “RDDT.” This move signals Reddit’s embrace of cryptocurrencies as part of its financial strategy.
Bitcoin miner Marathon Digital announced the rollout of Slipstream, a new offering designed to expedite the processing of complex transactions on the Bitcoin network. Slipstream aims to simplify the confirmation of large or “non-standard” bitcoin transactions, eliminating delays and complications often encountered during such processes. Marathon will add eligible transactions to its mining pool, or mempool, for processing if they meet the minimum fee threshold and adhere to the network’s consensus rules.
KEY METRICS
Total Crypto Market Cap : $2.04 T
Bitcoin Market Cap : $1.00 T
Ethereum Market Cap : $352.83 B
ETH/BTC Ratio : 0.06
Ethereum Gas Price : 38 gwei
DeFi TVL : $102.24 B
Fear and Greed Index : 76 (Extreme Greed)
Federal Reserve Balance Sheet : $7.63 T
Weekly Spotlight on IC15
The global cryptocurrency market experienced a mixed trading session, with the IC15 Index fluctuating throughout the day. Despite some volatility, the index closed higher, gaining 756 points to reach 66,783 by 4 p.m. Polygon led the gains with a 6.12% increase, followed by Ethereum, Dogecoin, and Bitcoin, which recorded gains in the range of 0–4%. However, Torrential slide, BNB, Solana, and Cardano were among the major losers, experiencing declines in the 1–2% range.
Several regulatory developments were observed globally, indicating a growing focus on digital assets and blockchain technology. Virginia proposed the establishment of artificial intelligence and cryptocurrency commissions to support the development and expansion of the industry in the state. In Japan, proposed changes to existing regulations aimed to allow funding firms to invest in Web3 startups, while the European Central Bank (ECB) announced plans to introduce a single gateway authentication for the digital euro and advanced technology to ensure security.
The cryptocurrency market saw a decline in sentiment amid profit-taking activities, leading to mixed trading outcomes. The IC15 Index fell by 68 points to 66,715 by 4 p.m., with Torrential slide, Polygon, Solana, and Chainlink among the major losers, experiencing declines in the 1–3% range. Conversely, XRP, Tron, BNB, and Dogecoin recorded gains in the 1–3% range. Additionally, South Korea announced plans to lift the ban on spot Bitcoin ETFs and gradually open up institutional crypto investments and initial exchange offerings (IEOs).
Regulatory initiatives continued to shape the cryptocurrency landscape, with various countries outlining their approaches to stablecoins, crypto OTC trading, and digital payment adoption. Hong Kong proposed regulations for stablecoins and crypto OTC trading, emphasizing the government’s intention to establish a framework for both based on feedback received from consultations. Similarly, Turkey aimed to introduce crypto regulations to ensure consumer protection and foster innovation, while South Africa’s 2024 budget highlighted plans to promote digital payment adoption through stablecoins and blockchain to improve financial inclusion for marginalized groups. Additionally, Ripple partnered with Egypt’s Commercial International Bank (CIB) to leverage blockchain for cross-border payments, aiming to enhance efficiency and accessibility in the region’s financial system.
BATTLE OF THE BULL AND BEAR
Bitcoin’s current price action is reminiscent of previous bull markets, with the upcoming April halving expected to usher in a period of consolidation following recent gains. Rekt Capital, a well-known trader and analyst, predicted that Bitcoin’s price movement mirrors the patterns observed during the 2016 and 2020 bull runs. Despite facing resistance around $52,000, Bitcoin has been trading within a narrow range for over a week, with sentiment affected and altcoin performance subdued as a result.
Rekt Capital highlighted key stages typically seen in bull market formations, noting that a macro downtrend break usually precedes upward movement leading into the halving. However, he observed that the current pre-halving retracement phase, characterized by Bitcoin’s failure to break through resistance and subsequent retesting, has not yet occurred. This phase typically involves retesting support levels, and the absence of this pattern in 2024 raises questions about whether Bitcoin will retest the $45,000 resistance level before the halving.
Despite the cautious outlook, some market observers remain optimistic amid the ongoing range-bound price movements. Caleb Franzen, founder of research platform Cubic Analysis, noted that Bitcoin’s price has remained unchanged over the past seven days, suggesting stability in the market. Similarly, analyst Matthew Hyland emphasized the significance of the 0.618 Fibonacci retracement level from all-time highs, suggesting that a breach of the $49,000 level could signal a shift in market dynamics.
In other developments, Chainway Labs’ ZK-rollup project Citrea secured initial funding to bring zero-knowledge rollups to the Bitcoin blockchain. The project closed a $2.7 million seed round led by System Ventures, with support from other investors including Delphi Ventures and Taproot Wizards co-founder Eric Wall. Citrea aims to enhance Bitcoin’s scalability and support various applications without altering its consensus rules, leveraging zero-knowledge technology to process transactions more efficiently.
Citrea’s solution, based on the Ethereum Virtual Machine, seeks to position Bitcoin as a base layer for blockchain games, NFTs, and decentralized finance without compromising its security or consensus rules. By enabling developers to build on Bitcoin using familiar Ethereum tools, Citrea aims to expand the utility of the Bitcoin blockchain while maintaining its core principles as outlined in the original white paper.
Weekly Spotlight
Kraken, a major crypto exchange, has filed a motion to dismiss a lawsuit brought by the U.S. Securities and Exchange Commission (SEC), arguing that the SEC’s theory in the case could set a dangerous precedent for regulatory overreach. Kraken asserts that the SEC’s interpretation suggests the existence of an investment contract without contractual obligations or interaction between the issuer and the purchaser, which could grant the SEC extensive authority over commerce, potentially leading to an influx of private securities law claims.
Meanwhile, the decentralized finance (DeFi) protocol Blueberry faced challenges due to an ongoing exploit, prompting the protocol to pause its operations temporarily to limit potential damage. Users were advised to withdraw their funds from Blueberry lending markets, although some encountered difficulties due to issues with the platform’s front end. This incident highlights the vulnerabilities inherent in DeFi protocols and the importance of swift responses to mitigate risks.
In another development, social media platform Reddit disclosed its investment in bitcoin (BTC) and ether (ETH), signaling its embrace of cryptocurrencies as part of its financial strategy. This move aligns Reddit with other companies like MicroStrategy and Tesla, which have also invested directly in digital assets. Reddit submitted a filing with the SEC to go public on the New York Stock Exchange, indicating its confidence in the future of cryptocurrencies.
Marathon Digital, a bitcoin miner, announced the launch of Slipstream, a new offering designed to streamline the processing of complex transactions on the Bitcoin network. Slipstream aims to simplify the confirmation of large or non-standard bitcoin transactions, reducing delays and complications often associated with such processes. This initiative reflects efforts within the crypto industry to improve scalability and efficiency.
Bitcoin’s current price action mirrors patterns observed in previous bull markets, with the upcoming April halving expected to bring about a period of consolidation following recent gains. However, some analysts remain cautious, noting the absence of key retracement patterns typically seen before halvings. Despite this, market sentiment remains relatively stable, with analysts like Caleb Franzen highlighting Bitcoin’s price stability over the past week.
Additionally, regulatory developments globally are shaping the cryptocurrency landscape, with various countries proposing regulations to govern stablecoins, crypto trading, and digital payment adoption. Initiatives in Virginia, Japan, and South Africa demonstrate governments’ increasing focus on fostering innovation while ensuring consumer protection and regulatory compliance. These regulatory efforts, along with ongoing developments in the crypto space, are likely to influence market dynamics in the coming months.
