Market Summary

Bitcoin Price: US$ 20,871.50 (-0.40%)
Ethereum Price: US$ 1,552.52 (+0.17%) 

Republican Lawmakers Push Crypto Regulation With New House Subcommittee

• After assuming control of the House of Representatives, Republicans are forming what they are calling a first-of-its-kind congressional group focused on digital assets.
• The new Subcommittee on Digital Assets, Financial Technology and Inclusion was announced Thursday by Congressman Patrick McHenry (R-NC), as other subcommittees for the House Financial Services Committee were put forth.
• McHenry said he believes there’s “a big hole in how we structure the committee,” as it spends more resources on topics related to the digital asset sector instead of the larger financial industry, Politico reported Thursday.
• The subcommittee will be chaired by Congressman French Hill (R-AR), who was also named as the full committee’s vice-chairman. The new panel will provide “rules of the road” for federal regulators of the digital asset ecosystem, as well as develop policies that reach underserved communities through the promotion of financial innovation, according to a recent press release.
• “At a time of major technological advancement and change in the financial sector, it is our job to work across the aisle and promote responsible innovation while encouraging FinTech innovation to flourish safely and effectively in the United States,” Hill wrote in a statement shared on Thursday.

FTX Cleared to Sell LedgerX, Other Assets to Repay Creditors

• A judge overseeing the FTX bankruptcy proceedings has given the crypto exchange permission to sell off some of its assets in order to repay creditors. The assets that will be sold include the CFTC-regulated derivatives exchange LedgerX LLC, the equities-trading platform Embed Technologies, FTX Japan Holdings, and FTX Europe. 
• Investment bank Perella Weinberg has been tasked with beginning the sale process. According to a court filing on January 8, Perella Weinberg partner Kevin Cofsky claimed that around 117 parties had expressed interest in purchasing the assets, and will now have access to information about them as part of their due diligence. 
• According to the filing, interested parties must submit non-binding preliminary bids for the asset they are interested in acquiring, with a January 18 deadline for Embed, a January 25 deadline for LedgerX, and February 1 deadlines for both FTX Japan and FTX Europe.

The storm has passed, but bitcoin mining difficulty is about to blow through the roof

• Bitcoin miners are bracing for a massive jump in difficulty this weekend.
• The increase could land somewhere around 10%, according to estimates from BTC.com, Bitrawr, Luxor and Braiins. Numbers could still change between now and Sunday, but estimates strongly indicate a sharp increase.
• Difficulty refers to the complexity of the computational process behind mining, and it adjusts roughly every two weeks (or every 2,016 blocks), based on the average block time.
• It fell 3.6% in the last update, following a winter storm that led a number of miners to power down, either due to price incentives or requests from grid operators.
• Now a lot of that hashrate seems to have gone back online, along with newly deployed and more efficient machines.
• “It’s a combination of the institutional miners scaling a bit over that longer time period, and some positive variance,” said Daniel Frumkin, director of research at Braiins.

Heightened activity in futures market underpins crypto rally

• Bitcoin has been trading sharply higher this weekend, underpinned by heightened activity in the futures market for digital currencies. The price of the biggest cryptocurrency was trading at $20,692 at 6:35 a.m. ET, according to data from TradingView. 
• Elsewhere, Solana was trading up more than 30% over the last 24 hours, while ether was trading up 7.7%. The move upward triggered $449 million in short liquidations on Jan. 14 — the highest level in months, according to data provided by Coinglass. 
• As noted by Crypto Quant’s Ki Young Jun, buyers entered the market early Saturday morning, purchasing ~$4 billion worth of bitcoin futures. Cryptocurrencies have been trading higher since new data released Thursday by the U.S. Department of Labor indicated a cooldown in inflation.
• The much-followed consumer price index declined in December on a monthly basis by 0.1%. Young Jun said that a pullback of a wide range of crypto market participants could be behind the extended gains. In the wake of bankruptcies including Sam Bankman-Fried’s Alameda Research and BlockFi, crypto brokerage firms and market makers have become less active.

Justin Sun eyes up to $1 billion spend on DCG assets: Reuters

• Tron founder Justin Sun is reportedly considering spending as much as $1 billion on assets of crypto conglomerate Digital Currency Group, which owns troubled crypto lender Genesis among several notable crypto firms. 
• While Sun did not specify which assets he was considering, he said in an interview with Reuters that he would be willing to spend as much as $1 billion, “depending on their evaluation of the situation.” 

You Can Now Stake Ethereum on MetaMask—Should You?

• The popular crypto wallet MetaMask has launched its staking functionality, meaning that users can now lock up their Ethereum through the new feature via Lido or Rocket Pool to earn financial rewards. 
• What that means is anyone with a MetaMask wallet can now easily start earning yield on any amount of ETH they’d like right from their wallet, and without having to navigate what can often be complicated user interfaces on staking applications. But should they?
• Staking, after all, isn’t without risk—not to mention the fact that unstaking (i.e. getting your ETH back from a staking contract) isn’t an option right now. Ethereum developers say, however, that this feature will be coming soon.
• For users who don’t mind the risks, staking can be a lucrative activity. While the rewards rates vary, MetaMask’s site claims users can earn a yield of about 5.22% per year on ETH deposits with Lido, and 4.59% with Rocket Pool. 

Digital asset-focused trading funds dominate top 14 equity ETFs in 2023: Bloomberg

• Digital asset-focused trading funds comprised the top 14 equity exchange traded funds (ETFs) in 2023 (excluding leveraged funds), according to data compiled by Bloomberg. 
• Some of the top performers include the Valkyrie Bitcoin Miners ETF (WGMI), which rose 67% in the past year, as well as the VanEck Digital Assets Mining ETF (DAM), which rose 56%. Notable mentions also include the VanEck Digital Transformation ETF (DAPP), Global X Blockchain ETF (BKCH) and the Bitwise Crypto Industry Innovators ETF (BITQ), which all increased by double-digit percentages. 
• The moves reverse ETF performance last year, which saw cryptocurrencies frequently falling in value, and notable companies like FTX implode. Though markets are recovering somewhat, the rallying digital asset-focused funds could be tied to the performance of crypto more generally, director of ETFs at WallachBeth Capital Mohit Bajaj told Bloomberg. 
• Though the U.S. SEC maintains high standards for digital asset-focused ETFs, other international ETF launches, like Hong Kong’s bitcoin and ether ETFs released on Dec. 15, 2022, have attracted millions in investment.

Grayscale Slams SEC’s ‘Unreasonable’ Barring of Spot Bitcoin ETFs

• In a new court filing, digital asset management company Grayscale blasted the U.S. securities regulator for its “illogical” and “fundamentally unreasonable” argument against approving a spot bitcoin exchange-traded fund (ETF).
• The document filed on Friday was in response to the Securities and Exchange Commission’s (SEC) December defense of its decision to reject Grayscale Investment’s application to convert its flagship Grayscale Bitcoin Trust (GBTC) into a spot bitcoin ETF.
• On June 29, 2022, the same day the SEC rejected its application, Grayscale filed a lawsuit requesting the U.S. Court of Appeals for the District of Columbia Circuit review the order. Although a number of industry players rallied around Grayscale, the SEC stood by its rejection of the conversion, which would have allowed investors to hold bitcoin directly.
• While the SEC has approved multiple applications to set up futures-based bitcoin ETFs, which are trade agreements to be executed at a future date and price, the regulator has said spot bitcoin ETFs are vulnerable to “fraudulent and manipulative conduct.”
• Grayscale countered that argument Friday. It said that “a successful manipulation of prices in the spot bitcoin market would necessarily affect the price of bitcoin futures as well – and, therefore, the value of bitcoin futures ETPs’ holdings.” Grayscale called the SEC’s reasoning “illogical.”
• Grayscale also accused the SEC of exceeding its statutory authority, saying the agency “is not permitted to decide for investors whether certain investments have merit.”
• Final briefs on the case are due Feb. 3, after which three judges will be selected and the court will share a schedule for the lawsuit’s oral arguments, Grayscale Chief Legal Officer Craig Salm said in a separate blog post. He added that a final decision on the case could come by the fall.

Ignoring digital assets would be like sticking with paper over computers, BNY Mellon CEO says

• BNY Mellon is committed to continue exploring the digital asset space, albeit cautiously.
• CEO Robin Vince said on an earnings call today that digital assets are the bank’s “longest-term play” and acknowledged the world’s oldest continuously operating bank has to adapt to technology changes.
• “We’re investing for a future that probably will come to be, but it may not. But if it does come to be, we have to be there,” he said. “We do think it’s important for us to participate in the broader digital asset space.” 
• The bank’s chief compared ignoring the digital asset space to “being the custodian of 50 years ago and sticking with paper and not adopting a computer … That’s not going to be us.”
• BNY Mellon is one of several traditional institutional players entering the digital asset space. Fidelity opened retail crypto accounts in November, before filing metaverse trademark applications last month. BlackRock launched a private bitcoin trust last August as well as a crypto and blockchain-linked ETF in Europe.

Hive Blockchain Deploys First Intel-Powered Bitcoin Mining Machines

• Bitcoin mining firm Hive Blockchain (HIVE) has deployed its first machines based on Intel’s (INTC) Blockscale chips, the miner said on Friday.
• The new chips not only have the potential to break the effective duopoly of Bitmain and MicroBT in the mining machine market, but also allow mining companies to design computers to their specifications, a major departure from those other manufacturers’ models.
• Hive’s first 5,800 machines, delivered in late 2022 and dubbed BuzzMiners, can together produce computing power between 638 petahash/second (PH/s) and 754 PH/s, or 110 terahash/second (TH/s) to 130 TH/s per machine, said Aydin Kilic, the company’s president and chief operating officer. That lags behind some of Bitmain’s latest models such as the Antminer S19 XP or the S19 Pro+ Hydro.
• However, Hive hasn’t released power efficiency data for the machines, a key metric in an environment that has brought miners to their knees over power costs. Intel touted an efficiency of 26 joules/terahash (J/T) for the chips in April, which wouldn’t beat Bitmain’s S19 XP series, but is on par with or better than other models currently on the market.
• More than 1,500 of the Intel-powered machines have already been installed across the miner’s facilities in Canada and Sweden and they have met performance targets, the miner said. Hive had initially ordered 13,000 machines to be manufactured in 2022 but reduced the order “to methodically scale the business during the crypto bear market,” according to the Friday press release.

Glassnode 

• #Bitcoin markets display a fascinating and bizarre level of consistency between cycles.
• In the 2018-29 bear, $BTC traded below the 200DMA 🔵 for 386-days.
• With last weeks rally, $BTC is back above the 200DMA, having spent 381-days trading below it.