Friday, 15 December 2023

Market Summary

Market Summary 15 December 2023

Bitcoin Price: US$42,869.03 (+3.32%)
Ethereum Price: US$ 2,260.16 (+2.57%)

In response to the U.S. Federal Reserve’s release of its policy decision “dots,” revealing an expectation of a substantial 75 basis points in rate cuts in 2024, traditional financial markets experienced a notable surge. This contrasts with the mere 25 basis points anticipated by policymakers just three months prior. Following the news, major U.S. stock indexes rose over 1%, with the Dow Jones Industrial Average surpassing 37,000 for the first time. The bond market also saw significant movement, with the yield on two-year U.S. Treasuries dropping approximately 40 basis points, indicating a strong belief in imminent rate cuts. The Fed’s dovish signal impacted other markets, leading to a 2% decline in the U.S. dollar index and a 2.5% rally in gold prices. Bitcoin’s price also responded positively, recovering from a recent “flash crash.” Despite the Fed’s median forecast of 75 basis points in rate cuts in 2024, markets have priced in nearly 150 basis points, suggesting concerns about economic slowdown or inflation. Meanwhile, the Solana phone experienced a surge in sales attributed to arbitrage traders chasing a 30 million BONK token airdrop, resulting in the phone being on track to sell out. The BONK token, Solana’s equivalent to Dogecoin, has revitalised Saga, a blockchain-enabled smartphone, after a week of lacklustre sales. In the blockchain space, Chainlink’s data feeds are now available on Polygon’s layer 2 zero-knowledge rollup, allowing developers to integrate real-world data into on-chain applications on Polygon’s zkEVM, potentially unlocking the deployment of significant DeFi protocols in the coming year.

Investment firm cyber.Fund, an early Ethereum supporter, has committed $100 million to projects at the intersection of blockchain, artificial intelligence (AI), and the Internet of Things (IoT), aiming to foster the “cybernetic economy.” This move aligns with the increasing convergence of blockchain and AI, indicating potential growth in innovative applications. Meanwhile, crypto wallet firm Ledger experienced a security breach resulting in a $484,000 theft, as malicious code in the widely-used Connect Kit impacted major DeFi protocols. Users were cautioned against DeFi app usage until protocols were updated. Additionally, German fintech Teylor partnered with Taurus to tokenise SME loans, allowing professional investors to participate in returns through a blockchain-based secondary market, reflecting the broader trend of blockchain tokenisation in finance.

Cryptocurrency firms, including Binance, based in the United Arab Emirates (UAE) express optimism about the country remaining a hub for virtual assets, even amid the possibility of a shift to the U.S. should it become more crypto-friendly. The regulatory environment in the U.S., characterised by “regulation by enforcement,” has prompted global crypto firms to relocate to jurisdictions like the UAE, the United Kingdom, Switzerland, and Singapore. However, during a panel discussion in Dubai, the potential for companies to return to the U.S. in case of regulatory changes was discussed. Binance’s general manager for the Middle East and North Africa, Alex Chehade, emphasised the UAE’s robust infrastructure and supportive government initiatives, indicating confidence in the region’s appeal for crypto businesses. Meanwhile, the total value locked (TVL) in Cardano’s DeFi ecosystem has surged to over $440 million, driven by growth in lending protocols and on-chain exchanges. Cardano’s ADA token price has also seen a 17% surge, with expectations of continued growth due to the platform’s increasing TVL. In contrast, JPMorgan expresses caution about cryptocurrency markets into 2024, noting concerns about excessive optimism related to the potential approval of spot bitcoin exchange-traded funds (ETFs) by the U.S. Securities and Exchange Commission (SEC). JPMorgan expects ether (ETH) to outperform bitcoin and other cryptocurrencies, citing an upgrade to the Ethereum blockchain that will enhance scalability. The bank also mentions some reinvigoration in venture capital funding in Q4 2023 but highlights the disappointment in decentralised finance’s (DeFi) inability to make significant inroads into the traditional financial system.


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