Market Summary

Bitcoin Price: U$43.082.31 (-0.85%)
Ethereum Price: U$3,406.81(-3.78%)

Markets Tumble, Sentiment Sours, Polygon Gas Spikes

• December’s Fed meeting minutes released yesterday pointed towards quicker and more aggressive rate hikes than expected. Members of FOMC also expressed interest in reducing the size of  the Fed’s $8.7T balance sheet sooner than anticipated, the combination of which sparked a spike in market volatility.
• Risk assets like equities and crypto assets reacted swiftly to the news, tumbling after the minutes were released. The S&P 500 fell ~1.9% yesterday, its largest one day % decline since Thanksgiving; BTC and other major crypto assets fell anywhere from 5-15% over the last 24 hours as price declines triggered large liquidations (more on this below).
• Long-dated U.S. Treasuries also saw yields rise across the entire curve, leaving investors with few places to hide. Bond yields have been moving higher for much of the last month in anticipation, pushing the 10-year yield to its highest level since the end of March 2021.
• The risk-off sentiment was present as well in crypto markets, and leveraged long traders were liquidated on downward price movements; $850M of positions got liquidated in the past 18 hours (15 hours post minutes release at the time of writing).
• The Bitcoin Fear & Greed Index is now at its lowest level since July last year when Bitcoin was trading around $30k.
• Bitcoin is currently down nearly 40% from its all time high of ~$69k in November.
• Gas costs on Polygon Network have spiked more than 10 fold to over 500 gwei.
  The main culprit of the congestion is an NFT game called Sunflower Farmers, which is now the largest “gas guzzler” on the network, consuming over 30% of the gas on Polygon in the past hour.
• The flurry of activity has attracted validators trying to extract value from the situation. Block validators have been passing empty blocks which increases networking activity and results in higher gas fees paid to them by users.

Solana network faces degraded performance for the second time this week

• The Solana blockchain has faced its second network performance degradation incident this week. According to Solana, this is happening because of a rise in high compute transactions. 
• As a result, the network capacity, which was originally advertised to be 50,000 transactions per second (TPS), was reduced to several thousand TPS. Solana cited this as the reason why users experienced failed transactions and added that its developers are already working to fix the issues.
• This latest network issue came only a few days after a similar incident on Tuesday, where users experienced the same problems. Many speculated that the Tuesday incident was due to a distributed denial-of-service (DDoS) attack, but Solana co-founder Anatoly Yakovenko responded on Twitter, saying that it’s just the “pain of getting a new runtime commercialized.”

Vitalik proposes new ‘multidimensional’ Ethereum fee structure

• Ethereum co-founder Vitalik Buterin has put his thinking cap on again in an attempt to improve the current fee structure for the network.
• The proposal titled “Multidimensional EIP-1559” was laid out in a blog post on Wednesday in which Buterin noted that different resources in the Ethereum Virtual Machine (EVM) have different demands in terms of gas usage.
• He added that there are different limits for short-term “burst” capacity as opposed to “sustained” capacity within the EVM, citing examples of block data storage, witness data storage and block state size changes.
• Buterin outlined his fairly complicated proposed changes with a lot of technical math, but in a nutshell, the proposal offered two potential solutions using “multidimensional” pricing.
• The first option would calculate the gas cost for resources such as call data and storage by dividing the base fee for each unit of resource by the total base fee. The base fee is a fixed-per-block network fee included in the Ethereum Improvement Proposal (EIP) 1559 algorithm.
• The second more complex option sets a base fee for using resources but includes burst limits on each resource. There would also be “priority fees,” which are set as a percentage and calculated by multiplying the percentage by the base fee.
• LINK; Multidimensional Fee

Dapper Labs becomes the first NFT company to register to lobby with the US government

• Through a public disclosure on Jan 3, Dapper Labs became the first NFT company to federally register to lobby with the U.S. government. The company joins a growing list of influencers within the crypto industry that have taken to the floors of Congress in an effort to influence new policies. 
• Based in Vancouver, Dapper Labs offers a variety of nonfungible token (NFT)-based products and DApps. These include games like CryptoKitties, where players can breed and raise NFT kittens, and Cheeze Wizards, a tournament series where collectible characters can duel each other. Additionally, Dapper Labs is partnered with the NBA and is responsible for Top Shot, an NFT marketplace that sells highlights from basketball games. The UFC has also partnered with Dapper Labs to offer a similar service in the near future.
• According to the announcement, Dapper Labs has recruited Crossroads Strategies as their lobbying firm. The company reported that it would lobby for “Policy related to NFTs, blockchain and financial services.” Aside from recruiting a lobbying firm, Dapper Labs also recruited Alison Kutler as its new head of government affairs back in November 2021. Kutler is the former chief of the Consumer and Governmental Affairs Bureau and special advisor to the chairman of the FCC from June 2015 to Apr 2017.

NYC mayor getting paid in Bitcoin suggests buying the dip

• Newly sworn-in New York City Mayor Eric Adams is already using his influence to speak publicly about buying the recent Bitcoin dip.
• In a Thursday interview with CNBC’s Squawk Box, Adams said he had not yet received his first paycheck as the mayor of New York City, but reiterated his aim to make the city a Bitcoin (BTC) and crypto hub. When co-anchor Andrew Ross Sorkin pointed out that the price of the crypto asset has “come down” — dipping as low as $43,000 early Thursday — the NYC mayor seemed to be undeterred.

Binance buys the dip, adding over 43K Bitcoin to wallet

• Bitcoin billionaires continue to accumulate during the dip. As Bitcoin (BTC) filled the $42 thousand December price wick this morning, Bitcoin whales were busy stacking sats.
• One address belonging to Binance added 43,000 BTC on Tuesday at an average price of $46,553.68, bringing the wallet’s total value to $5.5 billion.
• Elsewhere, the third-largest Bitcoin address continued its spending spree, adding another 551 BTC since Cointelegraph last reported it bought the dip, just two days ago. The wallet continues to aggressively accumulate in the $40 thousand range, now owning a total of 121,396 BTC or roughly $5 billion.
• There was some consternation on social media platforms about the wallet owner behind the $43,000 BTC buy, but Binance confirmed ownership of the address in a tweet sent out in 2019.