Monday, 18 December 2023

Market Summary

Market Summary 18 December 2023

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

Bitcoin’s eight-week winning streak is at risk as its rally stalls around $42,000, temporarily disrupted by a 10% flash crash to $40,000 that triggered profit-taking, with $860 million flowing into exchanges, signaling potential sales. Despite a recovery to $43,000, on-chain data suggests a pause in the upward trend. If Bitcoin finishes below $43,800, it ends the longest winning streak since 2017. Analysts believe the dip is a minor setback, predicting a robust 2024 for Bitcoin due to dovish Fed policies, falling USD, and anticipation of U.S. regulatory approval for spot Bitcoin ETFs, potentially driving demand. Long-term holders remain steady, and the market may witness a perfect storm for a strong 2024, especially with the projected halving in April and spot ETF listings. In contrast, the Arbitrum network faced a “partial outage” amid heightened transaction traffic, impacting its sequencer, causing chaos in the community. Meanwhile, Solana’s price rally to $78 ignited interest in FTX’s bankruptcy claims, with its holdings in SOL tokens now valued at $4.2 billion, potentially leading to a 100% recovery for the FTX estate and intensifying competition for claims in the market.

Qredo’s Ankex cryptocurrency exchange, launched in the previous year by Qredo custody firm and led by former Genesis Trading CEO Michael Moro, has shut down due to unfavourable bear market conditions. Moro appears to have left the exchange, and Qredo has paused Ankex’s development, citing the need to pause its path amid challenging market conditions. In another development, Polygon Labs, the primary developer behind the Polygon blockchain ecosystem, has ceased contributions to Polygon Edge, the open-source software used to build Ethereum-compatible networks like Dogechain. The focus has shifted to Polygon CDK, a framework for layer-2 blockchains powered by zero-knowledge cryptography (ZK). Several projects, including Immutable, Astar, Canto, Gnosis Pay, and Manta Network, have committed to using Polygon CDK. Meanwhile, executives predict that tens of millions of gamers will enter the Web3 space in 2024, driven by the commercial release of highly anticipated blockchain games. Yat Siu of Animoca Brands expects significant growth in casual Web3 gaming, especially in Asia, where GameFi technology and NFTs have greater acceptance. The co-founder of Ambrus Studio, Johnson Yeh, sees potential in the free-to-play space and the sale of skins with smart contracts. Celebrities and brands are expected to continue endorsing Web3 projects, with legal clarity in the U.S. determining the extent of their involvement. The Sandbox co-founder Sebastien Borget highlights the significance of user-generated content in Web3 gaming, anticipating a theme for the coming year.

On December 17, Solana-based gaming ecosystem Aurory experienced a breach, causing an 80% drop in liquidity for the AURY-USDC pool on the Camelot decentralised exchange (DEX). The exploit targeted Aurory’s SyncSpace bridge on Arbitrum’s Camelot DEX, resulting in a liquidity decrease from $1.5 million to approximately $312,000. Tokens belonging to the Aurory team were reportedly stolen and sold, prompting the team to buy back the tokens as they investigate the incident. In another security incident, NFT Trader’s platform was exploited on December 16, leading to the theft of nearly $3 million worth of Bored Ape Yacht Club (BAYC) and Mutant Ape Yacht Club (MAYC) nonfungible tokens (NFTs). A community initiative, led by Boring Security, successfully recovered the stolen assets after paying a 120 Ether bounty to the attacker. Additionally, Tether responded to U.S. lawmakers’ calls for intervention by the Department of Justice regarding the illicit use of its stablecoin. Tether disclosed letters to lawmakers detailing its commitment to combating illicit use, including a Know Your Customer (KYC) program, transaction monitoring, and a collaboration with the FBI. The company also initiated a voluntary wallet-freezing policy and secondary market controls to freeze activity associated with sanctioned persons.

In the ongoing legal battle between Coinbase and the SEC, pro-XRP lawyer John Deaton accuses SEC Chair Gary Gensler of gaslighting the public and shifting his stance on cryptocurrencies. This follows the SEC’s rejection of Coinbase’s rulemaking petition, citing reasons such as applying current securities laws to cryptocurrencies and the importance of preserving the commission’s discretion. Deaton points out Gensler’s conflicting statements about the uniqueness of cryptocurrencies, highlighting a reversal from his previous acknowledgment of the regulatory gap due to crypto’s distinct nature. Meanwhile, Ripple’s Chief Legal Officer, Stuart Alderoty, predicts a possible resolution to Ripple’s SEC lawsuit in 2024 and anticipates the judiciary playing a role in curbing SEC overreach. Alderoty also foresees potential legislative challenges in implementing crypto regulations in the U.S. Congress. In another development, Grayscale addresses inaccurate reports about unfavourable tax implications for retail investors in the Grayscale Bitcoin Trust (GBTC) related to spot Bitcoin ETFs. Grayscale clarifies that cash redemptions of grantor trusts, like GBTC, are not taxable events for non-redeeming shareholders, debunking concerns of adverse tax consequences.


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