Coin360 Weekly Dispatch | Crypto Market Updates & Highlights | December 9 - December 15, 2023

Crypto Weekly Recap: Price Actions, Market Trends, and Key Developments

Bitcoin:

• Weekly change: -3.02%
• BTC had declined since peaking over $44,600 last week.
• Monday saw a steep fall from $43,880 to $40,550, triggering market shock and over $320M in crypto long liquidations. This 7.5% drop was Bitcoin's biggest one-day fall in a month.
• Crypto fund inflows reached $43 million, continuing an 11-week streak totaling $1.8 billion.
• Bitcoin's sharp decline coincided with key economic events, including the Federal Reserve’s meeting and CPI data release. Influenced by solid U.S. economic data, short-term profit-taking, and macroeconomic factors, this downturn was among the largest recently.
• Analyst William Clemente viewed the correction positively, suggesting it would clear out "weak hands" and leverage, setting up for future gains.
• Sen. Elizabeth Warren gained additional support for her crypto-targeting bill on Tuesday.
• The US CPI for December 12, 2023, rose 3.1% year-over-year, matching predictions. Bitcoin briefly hit above $42,000 before falling again, despite Wall Street's gains and the upcoming Federal Reserve rate decision. Core inflation remained at 4.0% year-over-year.
• Crypto markets declined despite SEC meetings regarding a Spot Bitcoin ETF.
• On Wednesday, Bitcoin rose above $41,000 amid Federal Reserve decisions. Short-term holders sold over $4 billion in BTC, a peak in 18 months, while Bitcoin whales increased their holdings.
• Thursday saw Bitcoin reach over $43,300 after the Fed decided to keep interest rates steady between 5.25% and 5.5%, the highest in 22 years, and lower its 2024 rate projection.
• A Ledger vulnerability led to a $60M liquidation, with Bitcoin's price fluctuating before stabilizing after a fix.
• The U.S. Federal Reserve signaled a more dovish policy for 2024, expecting a 75 basis point rate cut, up from the previous 25 basis point forecast.
• BTC's price fell over 3.2% in a day, dipping below $41,700 after the Dec. 15 Wall Street opening, following the SEC's rejection of Coinbase's rule amendment request.
• Bitcoin's daily transaction fees surpassed Ethereum's for the first time since November, indicating increased Bitcoin transaction demand.
• The US dollar has reached a 4-month low below $102 as Bitcoin trader Crypto Ed anticipated a 10% decline.  

Ethereum:

• Weekly change: -4.92%
• On Monday, Ethereum's price fluctuated dramatically, reaching $2170, leading to over $82 million in liquidated long positions. The drop below $2200 was due to intense selling by major holders amid economic uncertainty.
• Post-Shanghai upgrade, Ethereum's supply decreased by 1.195M ETH, influenced by heightened on-chain activities and trading bots. Yet, ETH's price fell below $2200 on Tuesday.
• Ethereum experienced a downturn on Wednesday, falling from $2,350 to $2,250. Concerns arose about "Disguised Whales" manipulating the network, raising fears of decision-making capture and scenarios similar to a 51% attack.
• The SEC delayed its verdict on the Invesco Galaxy Ethereum ETF until February 2024. Nonetheless, JPMorgan forecasted Ethereum's outperformance over Bitcoin in 2024.
• Bloomberg Intelligence's James Seyffart suggested January approvals for Bitcoin ETFs are probable, but Ether remains a distinct case.
• Ethereum's price rebounded above $2200 following indications of a dovish policy from the Fed.

Altcoins:

• Compound DAO's vote on a major bug fix fell short by 15,000 votes.
• Gods Unchained, rated 'Adults Only' for play-to-earn elements, was removed from Epic Games Store.
• Litecoin's active addresses reached a record high four months post-LTC halving.
• Synthetix announced the end of SNX token inflation, focusing on buybacks and burns; SNX price soared then dropped.
• Nym, Protocol Labs, Oasis, and Aztec formed the 'Universal Privacy Alliance' for web3.
• StarkWare distributed $3.5M in fees to developers through its 'Devonomics' program.
• Polygon introduced Celestia as a data solution for new Layer-2 developers.
• Aptos (APT) Token soared to June-level highs, defying recent token unlock.
• 3AC's Su Zhu faced Singapore court proceedings after being released, Bloomberg reported.
• OKX DEX experienced a $2.7 million exploit due to a suspected private key leak.
• Sam Altman planned to introduce Worldcoin's eye-scanning orb to Reddit and Microsoft.
• Yearn Finance's faulty script caused a $1.4 million treasury loss, leading to a reimbursement request.
• Coinbase's international branch started spot trading for non-US institutions.
• AI-related tokens surged amidst market caution before the Fed's rate decision.
• Gemini Earn users might recover only 60% of their crypto funds.
• Cronos Labs launched a public zkEVM chain testnet to boost mainstream adoption.
• LayerZero unveiled a testnet for its V2 iteration.
• IMMUTABLE hinted at gas-free web3 gaming with ZKEVM.
• The Interchain Foundation allocated $26.4M for the Cosmos ecosystem's expansion.
• Arbitrum experienced a 'Partial Outage' due to a traffic surge.

2024: A Pivotal Year for Bitcoin's Mainstream Journey

The Bitcoin journey in 2024 is shaping up to be an exhilarating one, marked by significant developments like the potential approval of spot Bitcoin ETFs and influences from Donald Trump's political moves. Key financial players such as BlackRock, Fidelity, and Grayscale are actively engaging with the SEC to launch these ETFs. 

The market is buzzing with anticipation, with projections of Bitcoin's price soaring to $100K. Amidst this, concerns about liquidity and regulatory challenges persist. This year could be pivotal for Bitcoin, possibly heralding a new era of mainstream acceptance and high market volatility.

Bonk Inu's Meteoric Rise in the Crypto Elite

Bonk Inu (BONK), a Solana-based memecoin, has soared 1000% in a month, entering the crypto elite with a $1.7 billion market cap. Its listing on major exchanges like Binance and Coinbase, coupled with a strong social media presence, has fueled its rise. However, its volatility, typical of memecoins, poses risks. 

BONK stands out with real-world applications within the Solana ecosystem, offering potential beyond mere speculation. Despite its explosive growth, investors should approach with caution due to its inherent unpredictability and reliance on Solana's performance.

KuCoin Exits New York, Facing $22 Million Fine

KuCoin, a major cryptocurrency exchange, has ceased its operations in New York following a $22 million fine. This action is a response to a lawsuit from the New York Attorney General (NYAG), accusing KuCoin of violating state securities and commodities laws. The settlement includes reimbursement to affected traders and a fine for regulatory breaches. 

This move signals a strict regulatory environment shaping the future of crypto exchanges, emphasizing compliance with laws. The broader impact includes increased scrutiny on other exchanges and ongoing debates over the classification of cryptocurrencies like Ethereum as securities. Expect tighter controls and a potential reshaping of the digital currency landscape.

Ledger Breach: A Call for Enhanced DeFi Security

Hackers exploited a vulnerability in Ledger's Connect Kit, affecting several DeFi applications and leading to a $484,000 theft. This breach involved a malicious version of WalletConnect, hijacking app front-ends. Major DeFi protocols like Sushi, Lido, Metamask, and Zapper were impacted, urging users to halt dApp usage temporarily. 

The vulnerability arose from Ledger's automatic update system. Ledger and WalletConnect swiftly removed the compromised software. The incident highlights the need for enhanced security in DeFi and vigilance against phishing attacks. Users are advised to update their Connect Kit software manually and verify transaction details carefully.

FTX vs. IRS: A $24 Billion Tax Showdown

In the high-stakes legal showdown between FTX and the IRS, a whopping $24 billion tax demand looms large. FTX, once a crypto powerhouse, now grapples with this massive tax claim amidst its bankruptcy saga. The IRS, unwavering, stands firm on their assessment, whereas FTX counters, demanding evidence to back the tax figures. 

This dispute isn't just about settling a bill; it's a pivotal battle that could set a significant precedent in crypto taxation. The outcome of this case is crucial, as it holds immense implications for FTX's future and the broader crypto industry, with many users anxiously awaiting the resolution.

Binance's Legal Woes and Market Share Decline

Binance faced significant legal and market challenges. The SEC accused Binance and its former CEO, Changpeng Zhao, of deliberately violating U.S. law. Binance countered, arguing the SEC failed to meet legal requirements for its lawsuit, specifically questioning the application of the "Howey Test" to their activities. Amidst these legal battles, Binance's market share in crypto trading plummeted to 30%, down from 55% at the year's start, with monthly spot volumes dropping over 70% from $474 billion to $114 billion. 

Additionally, Binance halted support for the Russian ruble on its P2P platform following its exit from Russia, a move aligned with its compliance strategy. This decision came after Binance agreed to pay $4.3 billion in U.S. settlements over various charges, including sanctions law violations, leading to Zhao's resignation as CEO. Despite these setbacks, Binance remains the largest crypto exchange, with a significant margin over its closest competitor, OKX.

Tether's Wallet-Freezing Policy: Aligning with US Regulations

Tether, the issuer of the largest stablecoin, has implemented a new wallet-freezing policy, freezing 41 wallets linked to the U.S. Office of Foreign Assets Control's (OFAC) Specially Designated Nationals (SDN) List. This move is part of Tether's efforts to combat cybercrime and align with U.S. regulations. Several of these wallets were involved with the coin-mixing service Tornado Cash, and one was associated with the $625 million Ronin Bridge attack, attributed to the North Korean hacking group Lazarus. 

Previously, Tether had frozen 32 wallets linked to terrorism and warfare in Ukraine and Israel and $225 million related to a human trafficking syndicate. This policy reflects Tether's commitment to regulatory compliance and the promotion of a safer stablecoin ecosystem.

SafeMoon Files for Bankruptcy Amid SEC Fraud Charges

SafeMoon, a DeFi protocol, has filed for Chapter 7 bankruptcy following charges of alleged fraud by the U.S. Securities and Exchange Commission (SEC). The filing, submitted to the United States Bankruptcy Court in the District of Utah, reveals that SafeMoon US LLC has assets estimated between $10 million and $50 million, with liabilities ranging from $100,001 to $500,000. This development comes after the arrest of executives John Karony and Thomas Smith, and charges against Kyle Nagy, who remains at large. 

The executives are accused of failing to deliver promised profits and misappropriating investor funds for personal use, leading to a significant drop in the SafeMoon token value, which fell 14.4% in 24 hours. The Chapter 7 bankruptcy implies liquidation of assets to repay creditors, differing from Chapter 11, which involves restructuring. The firm also faces a lawsuit from the SEC alleging fraud and securities law violations.

First Conviction in Solana DeFi App Fraud Case

Shakeeb Ahmed, a security engineer, pleaded guilty to defrauding two Solana DeFi apps and stealing over $12 million. He targeted an unnamed decentralized exchange and Nirvana Finance, using flash loans and manipulative tactics. Ahmed attempted to conceal his actions by exchanging funds, using crypto mixers, and exploring legal defenses. 

He has agreed to pay $5 million in restitution to the victims and faces a maximum of five years in prison. The U.S. Department of Justice's announcement marks the first smart contract fraud conviction, demonstrating the consequences for fraudulent activities within the crypto space.  

El Salvador's Crypto-Centric Economic Strategy

El Salvador's Freedom Visa Program, designed to attract crypto millionaires, has garnered $153 million in less than a week, with 153 individuals signing up. Each participant pays a $1 million fee in Bitcoin or Tether (USDT) for citizenship, capped at 1000 people annually. This initiative aims to bolster El Salvador's economy, already benefiting from Bitcoin adoption, with reduced living costs and a boosted tourism sector. 

Meanwhile, the country's Bitcoin-backed 'Volcano Bonds' have received regulatory approval from the Digital Assets Commission (CNAD), with issuance planned for early 2024. These bonds, offering a 6.5% annual return over ten years, aim to raise $1 billion, leveraging El Salvador's renewable energy-powered Bitcoin mining industry. This move marks a significant step in El Salvador's Bitcoin-focused economic strategy.

Top Weekly Altcoin Gainers and Losers

Gainers:

Bonk BONK (+190.72%)

Osmosis OSMO (+82.48%)

Injective INJ (+82.28%)

Kujira KUJI (+71.70%)

WOO Network WOO (+65.99%)

Losers:

Lido DAO Token LDO (-14.36%)

Terra Classic LUNC (-14.10%)

WEMIX WEMIX (-9.70%)

Mantle MNT (-9.63%)

Conflux CFX (-9.35%)