Market Summary

Bitcoin Price: US$ 22,963.00 (-1.19%)
Ethereum Price: US$ 1,650.43 (-1.23%) 

Bull v Bear – Identifying Risk – 8th Feb – Video Stream

• Charts of the Week (00:17)
  • Kevin: Bond Market Signalling Fed Policy Already Too Tight
  • Jason: What Type of Market is This?
• Market Matters (05:55)
  • Risk in the Market: What narratives are overexposed?
• Bullish or Bearish (21:14)
• Ordinals bullish or bearish Bitcoin?
  • Is a pivot a good thing?
  • Will the market continue the 2019 playbook?
  • Will markets make new lows this year?

Deep Dive Into the Solana NFT Ecosystem (I): Marketplaces and Key Metrics

• It has been quite the rollercoaster ride for Solana NFTs. In our Year Ahead report, we wrote a brief note on how Solana NFTs faced an existential crisis in November 2022 with the fall of its largest backers: FTX, Alameda Research, and Sam Bankman-Fried. At that time, fear was plentiful and many NFT founders were seriously considering moving their projects off Solana to another chain. In hindsight, that was a test of character, and so far it appears that Solana has passed — the Solana community has shown its resilience and bounced back strongly. The ecosystem is as vibrant as ever.
• From our research, we have reason to believe that the Solana NFT ecosystem will continue to thrive and grow in the coming months. Many interesting opportunities will present themselves for those who are watching carefully. We’ll first dive into the current state of Solana’s NFT ecosystem and usage metrics. We’ll also examine the strengths and weaknesses of some of the key marketplaces currently operating within the ecosystem.
• Compared to the peak of the broad NFT bull market in early 2022, Solana has grown significantly in market share, rising from 6% to 14% of total NFT sales volume in less than a year. Some of this is amplified by the steep contraction in 30-day NFT sales volume on Ethereum, which has fallen from $2B to $800M, making it easier for Solana to capture relative market share.
• Over the past year, NFT sales volume on Solana has also significantly outperformed chains like Ronin, Avalanche, and Flow, which have actually lost market share. The gap between Solana and the next competing blockchain has widened significantly. We expect this trend to continue for a while. In crypto, winners tend to keep winning because of positive network effects — rising interest in Solana NFTs → greater liquidity and transaction volume → more founders building interesting NFT projects on Solana → more interest in Solana NFTs.
• Continue on Delphi…

Coinbase’s Armstrong says staking restrictions would be ‘terrible path for the U.S.’

• Coinbase CEO Brian Armstrong used a Twitter thread to warn about what he said would be a “terrible path” for the U.S. if it were to restrict crypto staking in the country.
• “We’re hearing rumors that the SEC would like to get rid of crypto staking in the U.S. for retail customers,” he wrote in a thread on Twitter, arguing that it was an important innovation in the space that fosters scalability, increased security and reduced carbon footprints. “Staking is not a security.”
• Securities and Exchange Commission Chair Gary Gensler raised eyebrows last year after Ethereum’s proof-of-stake transition when he hinted that the commission could classify tokens in proof-of-stake networks as securities.
• Armstrong said Wednesday that it was important that companies are encouraged to grow in the U.S. and not be stifled by a lack of clear rules.
• “It’s a matter of national security that these capabilities be built out in the U.S.,” he wrote. “Regulation by enforcement doesn’t work. It encourages companies to operate offshore, which is what happened with FTX.”

Bitcoin NFTs Explode in Popularity as BitMEX Research Shows 13,000 Ordinals

• Crypto derivatives firm BitMEX has identified over 13,000 Ordinals NFTs on the Bitcoin blockchain, evidence that buzz about a still-young flavor of non-fungible tokens is growing fast.
• The firm’s research arm published a blog post on Wednesday showing that 13,000 Ordinals were minted or “inscribed” between their debut on Dec. 14 and Feb. 7.
• In a few short weeks, the sudden influx of JPEGs and other media files onto Bitcoin has consumed 526 megabytes (MB) of block space and cost creators 6.77 bitcoin (roughly $155,000 at the time of publication), according to the post.
• When plotted out graphically, the total number of Ordinals transactions to date shows a steep “hockey stick” curve, indicating NFT activity on Bitcoin has gone exponential.
• The surging popularity of Ordinals has drawn the ire of prominent Bitcoiners such as Rene Pickhardt, who accused the Ordinals crowd of “spamming” the most dominant blockchain with oversized JPEGs.

Robinhood Board Authorizes Purchase of Shares Bought by FTX’s Sam Bankman-Fried, Gary Wang

• Robinhood Market’s (HOOD) board of directors authorized the company to pursue purchasing most or all of the 55 million shares that Emergent Fidelity Technologies bought in May 2022, Robinhood said in its fourth-quarter earnings report.
• Emergent Fidelity Technologies is the holding company controlled by former FTX executives Sam Bankman-Fried and Gary Wang. Last month, the U.S. Department of Justice seized those shares of Robinhood stock, worth nearly $500 million at the time.
• “The proposed share purchase underscores the confidence the Board of Directors and management team have in our business,” the company wrote in its press release.
• On the earnings call with analysts, Robinhood CEO Vlad Tenev said “we think this repurchase will be accretive over time and remove a distraction for shareholders.” He noted that the company’s balance sheet is strong with over $6 billion in cash.
• Tenev added that because it was an unusual situation, he couldn’t predict how long the purchase of its shares will take, but that it would keep investors updated on its progress.

AI Token Search Traffic Spikes as Crypto Traders Seek Exposure

• Five out of the top six trending cryptocurrencies on price tracker CoinGecko on Wednesday had one thing in common: They’re all related to artificial intelligence, crypto’s hottest new fad.
• The tokens – Vaiot’s VAI, SingularityNET’s AGIX, Fetch.ai’s FET, DeepBrain Chain’s (DBC) and GNY – are all up at least 70% in value in the past week, outperforming the CoinDesk Market Index – which barely budged, decreasing 0.68% over the same period. The leader of that pack, AGIX, had the largest jump at over 160%. CoinDesk reviewed the trends through data platform SigDev.
• AI tokens are garnering massive interest from the crypto space, and their growth in both price and search traffic is one signal showing traders trying to capitalize on the flurry of AI-related headlines that have captured the zeitgeist because of ChatGPT.
• Major tech companies are betting big on language models. Microsoft has reportedly invested $10 billion in the chatbot’s creator, OpenAI. That has sparked an AI arms race among search engine companies rushing to overhaul their tech.

Crypto Exchange Kraken Facing SEC Probe, Settlement Could Come Soon: Bloomberg

• Kraken is under investigation by the U.S. Securities and Exchange Commission (SEC) as to whether rules were broken in certain offerings to U.S. investors, Bloomberg reported Wednesday.
• The probe is at an advanced stage and a settlement could be announced in coming days, the report added.

MakerDAO Contributors Propose First Native Liquidity Market Focused on DAI Stablecoin

• Leading MakerDAO community participants have proposed creating a liquidity market called Spark Protocol for lending and borrowing crypto assets focused on DAI, Maker’s $5 billion stablecoin, according to a proposal posted on Wednesday in Maker’s governance forum.
• The first product will be Spark Lend, which will allow users to borrow DAI at a set DAI Savings Rate, which currently stands at 1%. According to the proposal, Spark Lend will support highly liquid decentralized assets as collateral such as ETH, DAI and wrapped derivatives of staked ETH (wstETH) and BTC (wBTC). Future features will include fixed-term yield products and the inclusion of Maker’s own synthetic liquid staking derivative (LSD) called EtherDAI.
• Spark aims to launch in April by opening a DAI lending vault on Maker with a $200 million debt ceiling, according to the proposal.
• Spark would use the smart contract system of Aave v3, the recently upgraded third version of the DeFi lending giant. In exchange, the developer team Phoenix Labs intends to send 10% of the protocol’s profits earned on the Spark Protocol’s DAI market in the next two years to Aave DAO.
• Implementing the Spark Protocol is subject to a vote by the Maker community.

Craig Wright Loses Bitcoin Copyright Claim

• Computer scientist Craig Wright has lost a claim in a UK court to protect the Bitcoin blockchain by copyright. 
• Wright, who has long asserted that he is Bitcoin’s pseudonymous creator Satoshi Nakamoto, claimed that Bitcoin forks—spin-offs derived from the cryptocurrency—breach his intellectual property rights because he created the original digital asset. 
• There have been many Bitcoin forks but the largest is Bitcoin Cash, the 28th-largest digital asset, with a market cap of $2.56 billion, according to CoinGecko. 
• A UK court threw out the claim on Tuesday, with Judge James Mellor saying: “Whilst I accept that the law of copyright will continue to face challenges with new digital technologies, I do not see any prospect of the law as currently stated and understood in the caselaw allowing copyright protection of subject-matter which is not expressed or fixed anywhere.”
• The Judge was referring to the issue of fixation—when something can be protected by copyright because it exists in its original form. He argued that “no relevant ‘work’ has been identified” showing Bitcoin’s origin. 

Aptos Plans Network Upgrade, ‘More Clarity’ Around Token Distribution

• In many ways, the crypto bear market adage about building has been ideal for Aptos.
• It took focus off the blockchain’s tokenomics, which drew a lot of criticism for being unveiled the day after its mainnet launch in October. A common refrain on Twitter at the time was that after raising $350 million at a valuation of more than $4 billion, Aptos should have been quicker to share details about how its native APT token had been distributed.
• Now, after months of hosting hackathons and securing partnerships, the Aptos Foundation is planning a network upgrade and is revisiting its tokenomics with the goal of providing greater transparency.
• “We are going to provide a little bit more clarity and more details behind the principles, and how we came to the decision that we made,” Mo Shaikh, Aptos CEO, told Decrypt. “But a lot of it all goes back to thinking about the people, so we’re gonna have a fairly detailed document that’s going to go live at some point.”
• “Tokenomics” is a portmanteau of token and economics and in plain terms refers to the characteristics of a cryptocurrency that determine its value, such as its supply and distribution. Shaikh didn’t share any other details about how the team will add more clarity to its tokenomics, or say whether the update will change how tokens have so far been distributed.

Bitcoin ATM Operator Coin Cloud Files for Bankruptcy With Liabilities of $100M-$500M

• Coin Cloud, which operates more than 4,000 bitcoin ATMs across the U.S. and Brazil, has filed for bankruptcy protection with estimated liabilities of between $100 million and $500 million.
• The Las Vegas-based firm has assets of between $50 million and $100 million and as many as 10,000 creditors, according to a filing in the U.S. Bankruptcy Court for the District of Nevada dated Feb. 7.
• The company’s largest creditor is Genesis Global Trading, which has an unsecured loan of just over $100 million. Genesis is a subsidiary of Digital Currency Group, which is also the parent company of CoinDesk. Genesis also discussed injecting equity into the ATM operator, Bloomberg reported in November.

Cardano DEX SundaeSwap Floats First On-Chain Governance Proposal

• Prominent Cardano-based decentralized exchange (DEX) SundaeSwap has floated its first on-chain governance proposal, developers said Tuesday. Voting on the proposal is scheduled to run until Feb. 19.
• “Until now, exactly how that governance should take place has been unclear,” the proposal description reads. “SundaeSwap Labs proposes that such governance use the auditable off-chain governance technology developed in-house, as well as a set of rules and procedures by which proposals for the future of the decentralized protocol can be considered, voted on and adopted.”
• The proposal determines the terms, conditions and parameters of future proposals on the SundaeSwap governance forum. Any passed procedure can be changed in the future with another governance proposal.
• As per the proposal, any wallet with a minimum of 10,000 SUNDAE can float new proposals to the SundaeSwap community after an initial “temperature check” – an initial testbed for new ideas. Proposals once floated cannot be edited.

Dubai Prohibits Privacy Coins Like Monero Under New Crypto Rules

• In Dubai, the issuance of, and all activities related to, anonymity-enhancing cryptocurrencies such as monero (XMR) are prohibited under new laws published Tuesday.
• The jurisdiction in the United Arab Emirates (UAE) published its long-awaited crypto regulations, which sets licensing and authorization requirements for virtual asset companies and issuers looking to operate in Dubai.
• The new rules define anonymity-enhancing crypto as “a type of Virtual Asset which prevents the tracing of transactions or record of ownership through distributed public ledgers and for which the [Virtual Asset Service Provider] has no mitigating technologies or mechanisms to allow traceability or identification of ownership.”
• Regulators in other jurisdictions like Japan have also taken steps to prohibit privacy-enhancing crypto. The European Union is also considering prohibiting tokens that hinder traceability.
• “Any obfuscation of fund flows poses a challenge to detecting illicit activities, so it is unsurprising that regulators react strongly to these kinds of asset classes and mechanisms,” said Angela Ang, senior policy adviser at blockchain intelligence firm TRM Labs.