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Crypto: GBTC Outflows Boost ETF Alternatives, Trump’s Stance Against CBDCs, and More

Fernanda T
Latest News
January 18 2024 9:29AM

Opposing trends: Cryptocurrency decline and dollar rise after Bitcoin ETFs

The recent approval of Bitcoin ETFs has generated a surge in trading volume in the cryptocurrency market. However, an unexpected premium on spot Bitcoin points to an unusual market. The price of Bitcoin, undergoing an ongoing correction, has been exacerbated by growing risk aversion among investors. Fernando Pereira, an analyst at Bitget, noted strong selling pressure in cryptocurrencies and exchanges, paralleled by a rising dollar. “While cryptocurrencies and stock markets are experiencing a strong increase in selling pressure, the dollar is moving in the opposite direction. I expect a decline in digital assets in the coming days and a rise in the dollar, and consequently in USDT and other stablecoins tied to it.” Additionally, Bitcoin’s hash rate (COIN:BTCUSD) has fallen 25% since the weekend, a concern for network security ahead of the halving event. The drop primarily occurred due to Texas miners reducing power to cope with a cold snap. The decline in the hash rate, which measures computational power in mining, is crucial especially before the halving event, which will halve miners’ rewards and could impact Bitcoin’s price.

Ether call options with a strike price of $2,550 concentrated ahead of expiration

Ether call options (COIN:ETHUSD) with a strike price of $2,550 are the largest group of outstanding contracts, totaling over 24,600 contracts with a notional value of over $62 million and an expiration date of January 19. This concentration suggests that many traders anticipate that the price of Ether will rise above $2,550 by the expiration date, although the price of Ether has fallen about 2.4% in the last 24 hours, trading at $2,468.70.

TUSD attributes price fluctuations to community mining activities, rebounds to $0.9904

TrueUSD (COIN:TUSDUSD), a stablecoin, attributed recent price fluctuations in relation to its $1 value to “community mining activities associated with the Launchpool,” resulting in short-term arbitrage opportunities. The value of TUSD has rebounded to $0.9904 after a drop to $0.9708. The project emphasized the stability of its currency, addressing concerns about its departure from the $1 value. Speculation linked this departure to the removal of TUSD from Binance’s launchpool asset list, leading to significant selling of the currency. Despite a significant increase in circulating supply last year due to Binance’s support, TUSD supply has decreased by over 40% in the past two months with the promotion of FDUSD.

Tether increased its Bitcoin reserves by $380 million at the end of 2023

Tether (COIN:USDTUSD) added 8,888 BTC to its portfolio in the last quarter of 2023, totaling 66,465 BTC and becoming the 11th largest holder of Bitcoin (COIN:BTCUSD). This move is part of the strategy to reduce exposure to traditional assets such as US Treasury bonds and allocate up to 15% of profits to Bitcoin, following the announcement made in May 2023. Tether, the largest stablecoin holder with a market capitalization of over $95 billion, holds $72.6 billion in government bonds and $1.7 billion in Bitcoin, among other assets. The company purchased its first Bitcoin in September 2022, facing constant scrutiny over the quality of its assets.

Grayscale Bitcoin Trust outflows signal a shift to other ETFs

The recent withdrawal of $1.6 billion from Grayscale’s Bitcoin Trust (AMEX:GBTC) in just four days is leading investors to consider other Bitcoin ETFs. Notable analysts such as James Seyffart and Blachunas believe that a significant portion of these funds may migrate to alternatives with lower spreads, and they anticipate that this shift may not be immediately apparent due to the T+2 settlement count in the US.

BlackRock’s Bitcoin ETF reaches $1 billion in assets under management in one week

BlackRock’s iShares Bitcoin Trust (NASDAQ:IBIT), a spot Bitcoin exchange-traded fund (ETF), reached $1 billion in assets under management just one week after its trading began. IBIT consists of 99% Bitcoin and nearly $60,000 in fiat currency. With 25,067 tokens in its portfolio, the ETF closed on Wednesday trading at $24.41, with a slight premium of 0.42% over spot Bitcoin. The ETF has recorded an average daily trading volume of 14 million shares since its launch.

Bitwise’s Bitcoin ETF reaches $370 million in AUM in 4 days

Bitwise Bitcoin ETF Trust (AMEX:BITB) accumulated an impressive $370 million in assets under management (AUM) in its first four days of trading. This includes a notable influx of $68 million allocated for Bitcoin (COIN:BTCUSD) acquisition in just one day.

Global decrease in cryptocurrency developers in 2023

The Electric Capital report reveals a 24% decrease in the total number of cryptocurrency developers in 2023, with newcomers decreasing by over 50%. Despite this, the number of experienced blockchain developers continues to grow, surpassing 10,000 in 2024. The study shows that Ethereum leads in attracting new talent, while Bitcoin lags behind. Globally, the US sees a decrease in its share of developers, contrasting with an increase in regions such as South Asia and Latin America.

Illicit cryptocurrency transactions in 2023 totaled $24 billion, says report

Chainalysis, a blockchain intelligence company, revealed that over $24 billion in cryptocurrencies were received by illicit addresses in 2023, representing 0.34% of the total transaction volume. Although this amount is nearly 40% lower than in 2022, it is expected to increase as more illicit addresses are identified. Additionally, the report highlighted the prevalence of transactions with sanctioned entities, totaling $14.9 billion in 2023. Stablecoins were the preferred choice for illicit activities, surpassing Bitcoin for the second consecutive year. Scams and hacks decreased, while ransomware and dark web activities increased.

Trump against CBDC and division in the US

Former US President Donald Trump has expressed opposition to the creation of a Central Bank Digital Currency (CBDC), fearing excessive government control over finances. He vowed to block its introduction if reelected. In the US, opinions on CBDCs vary politically. Democrats like Elizabeth Warren support them, while Republicans like Ted Cruz are against them. The Federal Reserve maintains skepticism, citing risks and privacy concerns. Meanwhile, globally, several countries are exploring CBDCs, challenging the dominance of the dollar. Trump sees CBDCs as a threat to financial freedom.

Coinbase defends listed tokens against SEC allegations

In a court hearing, Coinbase (NASDAQ:COIN) faced questioning on Wednesday about whether the tokens on its platform are securities. The company was sued by the SEC in June 2023, accused of operating without proper registration. Coinbase contests this, arguing a difference between buying tokens and investing in companies. While acknowledging that some tokens may be considered securities, Coinbase challenges the SEC’s claim that the sale of tokens automatically constitutes an investment contract. The discussion extends to the definition of bitcoin and other legal aspects, and District Judge Katherine Polk Failla of New York said she would not make a decision on whether to dismiss the case or not.

Conflux Network develops Bitcoin interoperability solution

Conflux Network is working on an “EVM-compatible” solution aimed at interoperability with Bitcoin (COIN:BTCUSD). This solution will allow the transfer of Bitcoin and inscription-based tokens between the Conflux and Bitcoin networks, with a testnet expected by the end of March and the mainnet in May. Conflux, known for combining PoW and PoS for consensus, plans to use Bitcoin for gas fees and support Ethereum contracts on its network, offering more options for users to interact with decentralized applications.

Asteroid platform enables registrations on the Cosmos Hub network

Delphi Labs and the Astroport Foundation have launched Asteroid, a platform for registrations on the Cosmos Hub network. It allows data incorporation into blockchains that do not have native support for smart contracts. Users have already launched the first CFT-20 token, called Asteroids (ROIDS), as a proof of concept, which was quickly registered by users within hours. Asteroid provides a “metaprotocol” framework that opens doors to various applications beyond tokenization and data storage.

Public Goods Network, supported by Gitcoin, to shut down operations in six months

Public Goods Network (PGN), supported by Gitcoin (COIN:GTCUSD), a Layer 2 solution on Ethereum, plans to shut down all its operations by mid-2024. The decision to close PGN was motivated by challenges in migrating users to the network and operational costs that exceeded the project’s budget. PGN was developed in collaboration between Gitcoin and Conduit to offer a low-cost Layer 2 solution on Ethereum.

DYDX token reaches new high above $3 after increased trading volume

DYDX token (COIN:DYDXUSD), native to the dYdX Chain decentralized trading platform, reached over $3 for the first time this year after the platform became the largest DEX in daily volume. The platform’s version 4, based on the Cosmos interchain protocol, achieved a 24-hour trading volume of nearly $565.85 million, surpassing Uniswap (COIN:UNIUSD) on Ethereum. DYDX is showing positive performance but will face selling pressure with imminent unlocks of approximately $2 million in assets. At the time of writing, the token was down -5.10% in the last 24 hours, at $2.98.

MATIC sales pressure price after transfers from Celsius to Binance and Crypto.com

The Celsius platform transferred 25.76 million native Polygon tokens (COIN:MATICUSD) to Binance and Crypto.com, causing selling pressure and reducing the price of MATIC, which had exceeded $1 in December 2023. Concerns persist about the allocation of tokens from the Polygon Foundation.

Sui Foundation partners with Stork to increase speed and access to price data

Sui Foundation (COIN:SUIUSD), behind the Sui Layer 1 blockchain, has partnered with Stork to provide real-time price data to blockchain-based developers and protocols. The collaboration aims to improve transaction accuracy and reduce the risk of losses in wallets and perpetual swaps. Stork is an ultra-low latency oracle that publishes updates on over 80 price feeds in milliseconds. It also offers mark prices for DEXs, helping to smooth market volatility.

Flowdesk raises $50 million in Series B to boost Bitcoin ETF liquidity

Flowdesk, a cryptocurrency market maker that has become a liquidity provider for Grayscale’s Bitcoin exchange-traded fund (ETF), has raised $50 million in a Series B funding round. Led by Cathay Innovation and with contributions from companies like Ripple, Eurazeo, and others, the company will use the funds to expand its over-the-counter (OTC) operations, hire personnel, and strengthen its regulatory presence in Singapore and the US. The funding reflects the importance of liquidity in Bitcoin ETFs to attract institutional investors. Flowdesk also serves as a market maker for Societe Generale’s EUR CoinVertible stablecoin.

Woo Network raises $9 million to strengthen liquidity on WOO X

Woo Network announced the raising of $9 million from market makers to improve liquidity on the WOO X exchange. This funding, contributed by market makers such as Wintermute and Amber, demonstrates confidence in the platform. With plans for global expansion and a focus on regulatory compliance, Woo Network aims to enhance liquidity, primarily in BTC, ETH, and altcoin futures markets, as well as spot markets.