Thursday, 25 January 2024

Market Summary

Market Summary 25 January 2024

Bitcoin Price: US$40,084.88 (+0.47%)
Ethereum Price: US$ 2,235.02 (-0.34%)

The U.S. Securities and Exchange Commission (SEC) has delayed its decision on BlackRock’s proposed spot Ether (ETH) exchange-traded fund (ETF), postponing it one day ahead of the original deadline. The SEC cited the need for more time to review the proposed rule change. The first of several possible delays it comes nearly 45 days after Nasdaq filed for an iShares Ethereum Trust on BlackRock’s behalf. The SEC must make a final decision on BlackRock’s spot Ether ETF by August 7, and Bloomberg ETF analyst Eric Balchunas predicts a final decision on all pending spot Ether ETFs in May. Meanwhile, Bitwise, following the SEC’s approval of its spot Bitcoin ETF, has made public the Bitcoin addresses of its Bitwise Bitcoin ETF holdings, embracing transparency. The addresses currently hold 11,858.63 BTC, valued at approximately $465 million. Microsoft briefly reached a $3 trillion valuation, becoming the second company to achieve this milestone after Apple. The success is attributed to the rise of general artificial intelligence (AI) technologies, particularly Microsoft’s $13-billion investments in OpenAI and the market boom following OpenAI’s ChatGPT launch. Microsoft’s record revenue in the past two quarters is expected to continue, with analysts predicting another all-time high for sales, reaching around $61 billion in the next quarterly report. The company’s performance highlights the success of AI-related investments and products in both consumer and enterprise markets.

In 2023, the United States Securities and Exchange Commission (SEC) under Gary Gensler brought 46 enforcement actions against cryptocurrency firms, more than double the number in 2021, marking a 10-year high. The report from Cornerstone Research indicates that digital assets are a “top priority” for the SEC, with a total of $281 million in monetary penalties imposed for settlements. The number of SEC enforcement actions on crypto has increased by 50% in 2022 and more than 53% in 2023. While Gary Gensler has faced criticism for a “regulation by enforcement” approach, the SEC recently approved listings of shares of spot Bitcoin exchange-traded funds (ETFs) for the first time on January 10. Meanwhile, hacking groups linked to North Korea stole approximately $1 billion worth of cryptocurrency in 2023, a decrease from the $1.7 billion stolen in 2022 despite an increase in hacking incidents. The hackers diversified their targets and focused on phishing and social engineering tactics. Chainalysis expects North Korean hackers to continue evolving and becoming more sophisticated. Additionally, Nasdaq’s “Global Financial Crime Report” estimates that $3.1 trillion in illicit funds flowed through the global financial system in 2023, with $782.9 billion linked to drug trafficking and $346.7 billion to human trafficking. The report emphasises the need for multilateral cooperation to address financial crime, stating that no single entity can solve the complex problem alone. Notably, the report does not mention Bitcoin or cryptocurrencies, reinforcing the perception that fiat currency remains a dominant facilitator of crimes.

In the first seven days after their trading launches on January 11, nine spot Bitcoin ETFs, including BlackRock’s iShares Bitcoin Trust (IBIT) and Fidelity’s Wise Origin Bitcoin Fund (FBTC), collectively purchased 102,613 BTC, equivalent to around $4.1 billion. This amount represents 53% of all Bitcoin amassed by MicroStrategy over the past three years. BlackRock’s IBIT and Fidelity’s FBTC became the largest Bitcoin buyers among spot BTC ETFs, acquiring 37,304 BTC and 29,232 BTC, respectively. In contrast, Grayscale’s Bitcoin Trust ETF (GBTC), the largest Bitcoin ETF by BTC holdings, actively sold Bitcoin, disposing of 82,526 BTC, contributing to a significant drop in Bitcoin’s price from above $48,000 on January 11 to as low as $38,700 on January 23. The massive selling by GBTC has been associated with various factors, including the estate of the collapsed FTX crypto exchange dumping $902 million in GBTC shares and GBTC’s relatively high trading fees. Meanwhile, the Doomsday Clock, which reflects existential threats to the planet and humankind, was updated on January 23 to 90 seconds from midnight, citing concerns about artificial intelligence (AI) as a disruptive technology. The Bulletin of the Atomic Scientists highlighted AI as the “most significant development” in the disruptive technology space, pointing out potential risks such as corruption of information and military use of AI. The report emphasised the need for global cooperation to address the challenges posed by AI. Additionally, concerns were raised about Ethereum execution client Geth’s market dominance, with its share falling 5.2% to 78.8% amid fears of centralisation leading to a “black swan event.” Ethereum advocates expressed concerns that a bug in Geth could result in the loss of more than 80% of Ether staked on the network. The call for increased diversity in execution clients aims to reduce the risk of a critical bug in Geth affecting the entire Ethereum network. Nethermind, the second-largest execution client, saw its share increase to 14% despite identifying and fixing a critical bug in earlier versions. Coinbase, one of the largest Ethereum validators running on Geth, announced plans to transition to a multi-client infrastructure in the coming months.


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