Coin360 Daily Dispatch | Crypto Market Updates & Highlights | December 12, 2023

Bitcoin's Sharp Decline Amid Economic Predictions

Bitcoin surged to $43,000, then dropped to $41,800 following profit-taking. In just 20 minutes, a 7% decline erased a week's gains. Liquidations totaled over $335 million, led by a sharp dip and stock market volatility. Analysts foresee a needed dip for rally assessment. Positive catalysts, including a potential ETF, support an optimistic outlook for Bitcoin. 

The US CPI for December 12, 2023, met forecasts with a 3.1% year-over-year increase, aligned with expectations. Bitcoin's value briefly surged above $42,000, marking a 1.8% daily increase before retracting to under this level again, despite a positive Wall Street performance and in anticipation of the upcoming U.S. Federal Reserve rate decision. Additionally, the core inflation rate stayed consistent at 4.0% year over year, reflecting the anticipated economic trajectory. 

Ethereum's Supply Drop Post-Shanghai Upgrade

Since the Shanghai upgrade, Ethereum's supply has dropped significantly, with 1.195M ETH burned. This reduction is driven by increased on-chain activity and the use of trading bots. The network has become deflationary, with a 90% reduction in new ETH issuance. On-chain trading, particularly on Uniswap, has contributed significantly to the burn rate. Ethereum has dropped to under $2,200 in the past day.

Solana's Market Cap and DeFi Growth

Solana (SOL) has reached a $30 billion market cap and nearly $1 billion Total Value Locked (TVL) in DeFi, securing a top-five position. Leading protocols on Solana include Marinade Finance, Jito, and Marginfi, with significant TVL growth. The ecosystem's success, driven by faster and cheaper transactions, increases demand for SOL but bears risks due to leveraged staking and lending.  

Litecoin's Network Activity Surge

Litecoin's network activity spiked, with active addresses reaching a record high of 1.4 million, and wallet balances increasing 40% year-to-date. The launch of the LTC-20 token standard contributed to this growth. Despite the surge in network activity, LTC's price fluctuated, hitting $77 before falling to $72.45. This rally follows Litecoin's third halving event in early August.  

Synthetix's Token Inflation Strategy Change

Synthetix's governance proposal SIP-2043 was approved, ending SNX token inflation. New strategies, including buybacks and burns, will replace weekly inflationary rewards. The token's price surged to $4.75 with a 8% increase, and it has a supply of 328 million and fully diluted market capitalization of $1.5 billion. Synthetix facilitates decentralized derivatives trading, with over $890 million total value locked.  

KuCoin's Settlement and Exit from New York

KuCoin settled with NYAG for $22 million, exiting New York. The lawsuit, a first to label Ethereum as a security, accused KuCoin of operating without registration. This follows NYAG's actions against other crypto firms for legal violations, emphasizing regulatory scrutiny in the cryptocurrency sector.

Warren's Digital Asset Anti-Money Laundering Act Progress

Sen. Elizabeth Warren's "Digital Asset Anti-Money Laundering Act" gains five co-sponsors, including Sens. Warnock, Butler, and Van Hollen from the Senate Banking Committee. The bill aims to extend Bank Secrecy Act requirements to miners, validators, and wallet providers. It addresses concerns about crypto being used for illicit activities and has drawn attention from the Biden Administration and congressional leaders.  

BlackRock and Fidelity's Bitcoin ETF Discussions with SEC

BlackRock and Fidelity are discussing with the SEC a spot bitcoin ETF, including a "Revised In-Kind" model for flexible portfolio management and reduced redemption impact. BlackRock's proposal also permits share creation using cash, inviting Wall Street banks' participation and potentially boosting liquidity. SEC approval could significantly draw retail investors to digital assets.

South Korea's Proposed Crypto Regulations

South Korea's Financial Services Commission proposes new crypto regulations, including NFT exclusion from existing virtual asset definitions, interest payments on crypto deposits by banks, and mandatory cold wallet holdings for virtual asset service providers. The focus is on improving security measures for customer assets. Public feedback is sought, with a target of finalizing the framework by the first half of 2024.  

CFTC Chairman on Cryptocurrency Regulation

CFTC Chairman Rostin Behnam asserts that most cryptocurrencies are commodities, urging a revamp of existing laws to accommodate technological advancements. He emphasizes the urgent need for comprehensive regulatory frameworks given the permanence of crypto. Behnam calls for Congressional intervention to legitimize and integrate cryptocurrencies into the financial system, addressing terrorist financing and market integrity concerns.  

StarkWare's Developer Incentive Program

StarkWare, with the Starknet Foundation, is distributing $3.5 million in network fees to developers on Starknet, a layer-2 Ethereum blockchain. The "Devonomics" program allocates 10% of network fees to developers, with 8% for dApp builders and 2% for core developers, initially in ETH and later in STRK tokens.

Universal Privacy Alliance's Web3 Initiative

The Universal Privacy Alliance, led by Nym, unites web3 projects like Protocol Labs, Oasis, and Aztec. Backed by $150,000, the alliance aims to advocate for "privacy by design" technologies and influence policy decisions. Key focus areas include EU regulations, lobbying efforts, and possible expansion to include smaller organizations.  

M&G Investments' Crypto Derivatives Platform Investment

M&G Investments invested $20 million in GFO-X, a UK crypto derivatives platform, signaling rising institutional interest in crypto. Global pension funds are cautiously exploring crypto investments, focusing on risk assessment and regulatory developments, with an eye on diversification and potential growth in the sector pending regulatory approvals.

Polygon's Integration with Celestia's Solution

Polygon integrates Celestia's data availability solution into its Chain Development Kit, enhancing layer-2 networks on Ethereum. This move, set for early 2024, aims to reduce costs and streamline blockchain launches, benefiting projects like OKX and Immutable by lowering gas fees and promoting interoperability.

Binance's Russian Market Exit and P2P Changes

Binance is ending ruble support on its P2P platform as it exits Russia, effective Jan. 31. Customers can withdraw funds before then or transfer to CommEX, Binance Russia's new owner. This move follows the sale of Binance's local business to CommEX amid compliance concerns. 

In 2023, Binance's spot market share dropped to 30.1% from 55% at the start of the year, with monthly trading volumes declining by over 70% from $474 billion to $114 billion. Regulatory issues led to CEO CZ's exit and numerous executive departures. Despite the decline, Binance remains the largest exchange, followed by OKX at 8%, as per CCData.

FIFA's Digital Collectibles for Club World Cup

FIFA is launching a digital collection for the Club World Cup Saudi Arabia 2023, in collaboration with Modex. The initial release includes 100 digital collectibles, offering a chance to win tickets for the 2026 FIFA World Cup Final. An additional 900 collectibles will be available on the Polygon network via OpenSea. 

This marks a shift from FIFA's previous use of the Algorand network for NFTs. The Club World Cup features top teams like Manchester City, Fluminense, and Auckland City, among others. The partnership aims to leverage Web3 technology to enhance fan engagement.

China's Blockchain-Based Identity Verification System

China's Ministry of Public Security and Blockchain Service Network (BSN) have initiated RealDID, a blockchain-based identity verification system for 1.4 billion citizens. It allows users to control data disclosure, offers services such as real-name confirmation, encryption flow, and privacy protection login, aiming to enhance personal privacy and data security in the digital era, but raises privacy concerns. Top social media platforms are integrating RealDID, highlighting its potential global impact on identity verification practices.

El Salvador's Crypto Millionaire Visa Program

El Salvador's Freedom Visa Program, aimed at attracting crypto millionaires, has garnered $153M in less than a week, offering citizenship for a $1M fee in Bitcoin or Tether. This initiative limits to 1000 individuals yearly, enhancing El Salvador's economic growth. 

Concurrently, the country's Digital Assets Commission approved Bitcoin-backed "Volcano Bonds," set for early 2024 issuance. These bonds, part of El Salvador's pro-crypto stance since adopting Bitcoin as legal tender in 2021, aim to raise $1 billion with a 6.5% annual return, leveraging its renewable energy-powered Bitcoin mining industry.

SSV Network's Mainnet Launch and Ethereum Staking

SSV Network has launched its permissionless mainnet using distributed validator technology (DVT), addressing centralization concerns in Ethereum staking. The network aims to enhance Ethereum's security and resilience. SSV DAO has approved a year-long incentivization program, allocating 1 million SSV tokens to reward users for registering validators. Nearly $160 million worth of ether has been staked through SSV.Network.  

Bitcoin Inscriptions Debate and NVD's CVE List

Bitcoin developer Luke Dashjr denies involvement in adding Bitcoin inscriptions to NVD's CVE list despite criticizing Ordinals. Inscriptions, described as exploiting a Bitcoin Core vulnerability, received a 5.3 Medium severity score, indicating limited impact. The ongoing debate surrounds their effect on network congestion due to increased Ordinals activity and potential long-term blockchain bloat.  

Stablecoin Stability Assessments by S&P Global Ratings

S&P Global Ratings recently released stablecoin stability assessments for eight stablecoins, focusing on asset quality, regulation, governance, liquidity, and technology. USDC, USDP, and GUSD received strong assessments, while USDT, DAI, FDUSD were deemed "constrained," and FRAX and TUSD were rated as weak. S&P aims to expand assessments due to growing DeFi use cases.  

Do Kwon's Legal Situation Update

Do Kwon's detention in Montenegro has been extended until mid-February as he appeals extradition to the U.S. and South Korea. The court ruled in response to extradition requests from both countries. Kwon faces charges related to the collapse of TerraUSD stablecoin. He is appealing the decision and has been the target of a global manhunt.  

Top Altcoin Gainers and Losers

Gainers:

Kujira KUJI (+20.03%)

Celestia TIA (+18.89%)

Cosmos ATOM (+18.41%)

Losers:

Synthetix SNX (-8.07%)

BitTorrent New BTT (-7.70%)

Curve DAO Token CRV (-6.68%)