Coin360 Weekly Dispatch | Crypto Market Updates & Highlights | December 30, 2023 - January 5, 2024

Crypto Weekly Recap

Bitcoin:

• Weekly change: +2.25%
• Bitcoin began 2024 on a high, almost hitting $44,000 on January 1 due to U.S. ETF decision hopes and high December earnings from Bitcoin miners.
• On Tuesday, Bitcoin's value soared over $45,000, approaching $46,000 for the first time in 21 months, fueled by institutional demand, the upcoming April 2024 Bitcoin halving, and SEC ETF approval rumors.
• Bitcoin's value dropped 10% on its 15th genesis day, plunging from $45,600 to $40,700 on Wednesday, primarily due to a crypto market flash crash and over-leveraged market issues.
• Bitcoin bounced back above $44,000 on Thursday, aided by the Federal Reserve's indication against interest rate hikes and expectations of monetary easing in 2024.
• Friday saw Bitcoin rise to $44,500 then dip to $43,500, influenced by U.S. job growth exceeding expectations and the market waiting for ETF news, with mixed predictions from CryptoQuant and BitMEX co-founder about potential crashes and corrections.
• Bitcoin miners recorded $1.5B in monthly revenue, leading to potential price pressure and predictions of a drop to $32,000.
• Gabor Gurbacs and Bloomberg ETF analysts forecast a modest initial impact from Bitcoin spot ETFs, with $100 million in net inflows but significant long-term growth.
• Bitwise reports that 39% of financial advisers expect a 2024 Bitcoin ETF approval, but 88% express interest in investing post-approval.

Ethereum:

• Weekly change: -5%
• Ethereum started the year on January 1 at over $2,350, up 7% from the previous week's $2,193 low, driven by positive market sentiment and Vitalik Buterin's 2024 roadmap proposal.
• Ethereum briefly hit $2,400 on Tuesday, influenced by expectations of a U.S. Bitcoin ETF and forthcoming U.S. economic reports.
• On Wednesday, Ethereum fell 14% to $2,200, erasing $100 million in long future contracts, but rebounded to $2,300 by Thursday, signaling reduced panic selling.
• Since December 30, 2023, Ethereum's supply grew by 3,051 coins, attributed to a lower post-merge burn rate and increased Layer 2 adoption.
• As per Bloomberg ETF analyst James Seyffart, the U.S. SEC's approval of ETH futures ETFs, acknowledging Ether as a commodity, may lead to a spot Ether ETF approval, with a decision expected in May 2024. 

Altcoins:

• In January 2024, token unlocks will introduce over $600 million in liquidity into the market. Aptos (APT): 24.84 million tokens, $234.76 million. Injective (INJ): 3.67 million tokens, $136.73 million. Optimism (OP): 24.16 million tokens, $87.70 million (source).
• Stake, a crypto betting company, secured naming rights for Sauber's F1 Team.
• A crypto wallet founder fell victim to a fake LFG token phishing attack, losing $125,000 (source).
• Both Arbitrum and Optimism tokens approached their all-time high prices as layer 2 chains gained momentum (source).
• Jupiter scheduled a JUP airdrop for the end of January 2024 (source).
• Osmosis achieved $1 billion in monthly volume, fueled by growing interest in the Cosmos ecosystem.
• Stacks (STX) saw a 10% price increase, driven by market recovery and the anticipated Nakamoto upgrade.
• Etherscan expanded into the Solana ecosystem through the acquisition of Solscan (source).
• ENS Token surged by 50% following Vitalik Buterin's endorsement of its importance (source).
• Crypto investment products attracted $2.2 billion in total inflows in 2023, according to CoinShares (source).
• Korean gaming company Wemade faced a $41 million tax bill after initiating a $100 million Web3 fund.
• The Solana Foundation planned a $10 million-plus expansion into Brazil.
• Arbitrum Orbit announced that Layer 3 chains could now use select ERC-20 tokens for transaction fees.
• Starknet commenced a delegated vote to transition the STRK fee payment upgrade from testnet to mainnet (source).
• Celestia (TIA) experienced a 671% gain, with a 22% increase as staking and the ‘Modular’ narrative gained favor (source).
• Beam Token's value rose as Merit Circle Network's transactions hit a record high.
• 9GAG Memeland Token surged following an investment from Binance Labs.
• SEI Network reached an all-time high of $0.8, with its memecoin SEIYAN leading with a 380% surge.
• The Maker market saw over 600 addresses complete MKR trades in a single day, indicating heightened activity (source).

Goldman Sachs Joins Bitcoin ETF Race

Goldman Sachs is set to become a key player in Bitcoin ETFs, aligning with BlackRock and Grayscale's proposals. This marks a significant shift in the financial sector's stance on cryptocurrencies. Grayscale is transforming its $26 billion Bitcoin Trust into an ETF, with Jane Street and Virtu Financial as potential authorized participants. Fidelity's Wise Origin Bitcoin Fund, registered on the Cboe BZX Exchange, awaits SEC approval. 

Tuttle Capital Management proposes six leveraged and inverse Bitcoin ETFs. However, there's skepticism about SEC approval, reflected in market sentiments. Firms like Grayscale and BlackRock are aligning their strategies with SEC guidelines, particularly regarding hard forks and cash redemption models.

Bitcoin's 15th Birthday Market Turmoil

On Bitcoin's 15th birthday, its value nosedived from $45,600 to $40,700, wiping out $100 billion in market cap. This crash coincided with a massive $514 million crypto liquidation. Matrixport stirred debate with a prediction of a 20% Bitcoin drop, amidst SEC's potential rejection of Bitcoin spot ETFs. 

The market was further rattled by Matrixport's conflicting reports, one predicting an ETF approval and price surge, and another forecasting rejection. This uncertainty led to diverse market reactions and debates over Matrixport's influence. Raoul Pal suggested three market trajectories, with varying probabilities for each, reflecting the ongoing volatility and unpredictability in the crypto space.

Celsius Network's Ethereum Unstake Amid Bankruptcy

Celsius Network, grappling with bankruptcy, has unstaked a large portion of its Ethereum holdings, worth about $468.5 million, to repay creditors. This significant move impacts nearly one-third of the ETH in the withdrawal queue, potentially influencing the market. Amidst restructuring, Celsius shifts focus to Bitcoin mining and plans to distribute $2 billion in Bitcoin and Ethereum to creditors. 

The company's founder faces fraud charges, complicating recovery efforts. Meanwhile, Ethereum's exit queue has surged, and the crypto market closely watches developments around Ether ETFs, with the potential approval of Bitcoin spot ETFs likely to affect ETH prices.

Orbit Bridge Heist Highlights Security Issues

On New Year's Eve, hackers stole about $81.7 million from Orbit Bridge, targeting Tether, USD Coin, Ether, Wrapped Bitcoin, and Dai. Suspected entry was through compromised multisig signatures. The heist caused Orbit Chain's token, ORC, to drop nearly 20%. This event, part of 2023's estimated $1.51 to $2 billion crypto losses, highlights the vulnerabilities of cross-chain bridges. 

Orbit Chain's response included an investigation with Theori and efforts to freeze the stolen assets. The incident emphasizes the need for enhanced security in the Web3 space and vigilance among users against the backdrop of increasing crypto crimes.

Tellor's Price Volatility Raises Concerns

Tellor (TRB), an Ethereum-based altcoin, experienced a dramatic price rollercoaster, soaring to $600 and then plummeting to $137, triggering $68 million in liquidations in just one day. This extreme volatility sparked widespread speculation about market manipulation. Key observations include the Tellor team depositing 4,211 TRB (worth $2.4 million) into Coinbase during this price surge, coinciding with the crash. This action raised suspicions of potential manipulation by the team. 

Additionally, on-chain data revealed that 14 whale wallets control 76% of TRB's supply, suggesting a high risk of market manipulation through pump-and-dump schemes. The crypto community is closely monitoring the situation, with significant concerns over the integrity of TRB's price movements.

Binance Increases Scrutiny on Privacy Coins

Binance has tagged privacy coins like Monero, Zcash, Horizen, and Firo with "monitoring tags," signaling higher volatility and delisting risks. This move, influenced by increased regulatory pressures and U.S. Department of Justice compliance, requires users to pass regular quizzes to trade these coins. Earlier, Binance delisted several privacy coins in Europe, adhering to local transaction monitoring regulations. 

The U.S. has expressed concerns over such coins due to their potential illicit use and transaction tracking difficulties. Binance's actions reflect its commitment to regulatory compliance, especially following a significant settlement with U.S. regulators.

Recent Security Breaches in Crypto

Recent crypto incidents include Radiant Capital's $4.5 million flash loan attack due to a codebase issue, dYdX's $9 million loss with the attacker identified, and Gamma Strategies' Ether drain of about $469,000, which was later confirmed to be a $3.4 million exploit by blockchain security firm PeckShield. Gamma has been attempting to negotiate with the hacker. 

Solana's price rise led to increased wallet drainer activities, affecting SOL and memecoin holders. CertiK's social media was hacked, prompting alerts against phishing links. These events emphasize the critical need for robust security and awareness in the crypto space.

SEC's Growing Focus on Crypto Regulation

The SEC is intensifying its scrutiny of the crypto industry, leveraging a recent Terraform Labs ruling in its cases against Binance and Coinbase. The SEC argues that the Terraform decision, which classified UST, LUNA, wLUNA, and MIR as securities, is pertinent to its case against Binance, particularly concerning the stablecoin BUSD. They contend that BUSD, like UST, should be considered a security. 

This stance is also being applied in a parallel lawsuit against Coinbase, focusing on a range of tokens including SOL, ADA, and MATIC. The SEC's approach indicates a broader strategy to apply traditional securities law to the crypto sector, potentially reshaping how crypto assets are regulated and traded.

IRS Rule 6050I Stirs Crypto Community

The new IRS Rule 6050I, effective from January 1, mandates U.S. businesses to report crypto transactions over $10,000 within 15 days, including sender's personal details. Non-compliance could lead to felony charges. This rule, however, doesn't affect individuals. Concerns arise around reporting block rewards and decentralized exchange transactions. 

The crypto community has reacted strongly, with some labeling the law as "stupid" and "draconian." Challenges in complying with the law are highlighted, especially in cases where sender details are not readily available, like in NFT transactions. This has led to frustration and confusion among crypto users and businesses.

Huobi Korea's Closure Amidst Market Challenges

Huobi Korea is shutting down its platform due to challenging business conditions, with services ceasing on January 29. Despite this, users can still withdraw funds post-closure. This move follows the separation from its parent company, HTX, in January 2023. The top five exchanges in South Korea dominate the market, holding over 99% of the trade volume. 

South Korea's strict regulations require exchanges to partner with local banks for fiat-to-crypto services, a criterion Huobi Korea failed to meet, limiting its operations to crypto-to-crypto trades. Additionally, South Korea proposes to ban credit card payments for crypto to prevent illegal fund outflows and speculative trading, aiming to implement this in the first half of 2024.

Top Weekly Altcoin Gainers and Losers

Gainers:

Sei SEI (+60.84%)

Celestia TIA (+32.37%)

Internet Computer ICP (+30.11%)

Arbitrum ARB (+27.80%)

Astar ASTR (+23.02%)

Losers:

Bonk BONK (-26.51%)

Uniswap UNI (-19.68%)

MultiversX EGLD (-19.36%)

Curve DAO Token CRV (-19.20%)

Bittensor TAO (-18.58%)