Coin360 Weekly Dispatch | Crypto Market Updates & Highlights | March 23 - March 29, 2024

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Crypto Weekly Market Update

Table of Contents

Crypto Market Trends

• Crypto Weekly Recap

Banking and Regulatory Updates

• Judge Denies Coinbase's Motion Against SEC
• KuCoin's Legal Challenges and User Reassurance
• Global Legal Challenges Mount for Binance
• The Fallout from Sam Bankman-Fried's Sentencing

ETF and Investment Products

• Bitcoin and Ethereum ETFs Attract Significant Interest

Tokenization and Real-World Assets

• Tokenization of Traditional Assets Expands

Meme Coins and Community Engagement

• The Rising Influence of Meme Coins

Decentralized AI Ecosystems

• The Formation of the Superintelligence Collective

Legal Battles and Regulatory Demands

• SEC's Billion-Dollar Demand from Ripple

Platform Security and Governance

• Recovering Funds and Ensuring Platform Security

Blockchain and Anime Integration

• AnimeChain's Initiative for Anime Fans

NFT Projects and Innovations

• Pixelmon Aims for a Resurgence with Fractionalized NFTs
• Metaplex Core: Solana's NFT Standard Revolution

Crypto Weekly Recap

Bitcoin

• Weekly change: -1.72%
• Bitcoin's price dropped over this week amid investor hesitancy, with digital asset investment products witnessing a record outflow of $942M following a 7-week inflow streak, influenced by the upcoming Bitcoin halving, macro factors, and expiring options.
• The price of Bitcoin surged past $66,000 early in the week, reaching $70,000 shortly thereafter.
• A rise in Bitcoin's price to over $71,000 was driven by futures market dynamics, bullish institutional acceptance news, Bitcoin ETF developments, and a technical breakout from a descending trend channel.
• Despite hitting $71,000 three times this week, efforts to breach $72,000 failed amidst significant regulatory disputes involving major exchanges like KuCoin, Coinbase, Binance, and Ripple, impacting market sentiment.
• Signs of institutional re-engagement emerged as Goldman Sachs' hedge fund clients increased crypto investments, with Bitcoin ETF interest spiking due to new launches and significant inflows since March 26.
• "Old whales" in Bitcoin began transferring assets to traditional financial institutions like Fidelity and BlackRock, possibly as a risk management tactic rather than outright selling.
• Bitcoin's Q1 2024 showcased a nearly 70% price rise, hinting at potential fatigue, per QCP Capital. Yet, Q2 looks promising due to anticipated BTC spot ETF demand, the upcoming halving, and possible ETH ETF approval.
• A record $1.4 billion USDC stablecoin influx into Coinbase signaled strong market buying pressure.
• Federal Reserve Chair Jerome Powell discussed the economy and monetary policy, noting Personal Consumption Expenditures data aligned with forecasts, urging caution against early rate cuts, and affirming confidence in the economy's resilience and the Fed's cautious policymaking approach.

Ethereum

• Weekly change: -0.01%
• Ethereum dipped during weekdays amid challenges.
• It soared past $3,600 on Monday and Tuesday but failed to maintain that level.
• The CFTC classified Ethereum and Litecoin as commodities, diverging from the SEC's stance, yet this did not boost Ethereum's value.
• Despite Ethereum's role in RWA tokenization and new spot ETF filings boosting its narrative, its performance lagged due to a pessimistic outlook on ETF approvals, with Bloomberg's Eric Balchunas dropping the approval odds to 25% for May.
• Ethereum's Dencun update introduced "blobs" for data, with a record 2,437 blob inscriptions on March 27, outpacing Layer 2 activity. Over 4,500 inscriptions were noted, though active addresses declined.
• The network hit over one million validators and 32 million ETH staked (worth about $114 billion), sparking debates over the impact of too many validators on network security.
• Without strong momentum, the ETH price was almost unchanged this week while some altcoins saw a gain.

Altcoins

• Binance Labs invested in StakeStone, marking a new phase in omnichain liquidity.
• A $16 million exploit impacted the Curio ecosystem, with 1 billion CGT tokens minted illegally.
• ParaSwap resolved a vulnerability in a new smart contract, returning crypto assets to users.
• DED memecoin faced community outrage due to reduced airdrop allocation.
• Avalanche and Chainlink collaborated on Australasian on-chain asset settlement.
• Do Kwon was released from Montenegrin prison on bail as Terraform Labs' civil trial began in NYC.
• WAX signed a deal with Amazon Web Services.
• A DeFi fund and Texas apparel company sued to defend an airdrop against the SEC.
• The Portuguese data regulator banned Worldcoin operations for 90 days.
• 0G Labs raised $35M for data availability, heating up competition.
• El Salvador's BTC holdings reached 5,700, netting nearly $80M in profit.
• Optimism set aside $3B for grants to blockchain builders.
• OKX quietly settled regulatory issues with the Malta Financial Services Authority.
• ETHFI surged nearly 3,000% in 10 days, dominating the staking narrative.
• Internet Computer users pledged $80M to decentralize its project ecosystem.
• 21Shares listed an ETP for staking the Telegram-endorsed token TON.
• The Near Foundation introduced chain signatures and multichain transactions.
• Sui and Revolut launched a global partnership.
• VeChain joined the tokenization scene with MaaS launch.
• Indonesia will require crypto products to pass through a regulatory sandbox.
• Ethena announced a token airdrop following USDe stablecoin success.
• Prisma Finance suffered an $11.6M hack, shaking up liquid staking, and moved to mitigate fallout.
• DEGEN launched an L3 on Arbitrum Orbit, leveraging base.
• Bybit expanded to Europe, launching the Dutch platform Bybit.nl.

Judge Denies Coinbase's Motion Against SEC

The legal tussle between Coinbase and the SEC reached a pivotal turning point as Judge Failla allowed the SEC's case to proceed, denying Coinbase's motion to dismiss allegations of operating as an unregistered securities exchange, broker, and clearing agency. 

While the court upheld SEC claims against Coinbase's exchange activities, it ruled in favor of the wallet application, celebrating the self-custodial wallet safeguard as a DeFi triumph. The case management plan must be submitted by April 19 as both parties prepare for a potential trial, with the closely-watched case having significant implications for crypto companies' operations under U.S. securities laws.  

KuCoin's Legal Challenges and User Reassurance

KuCoin, a major cryptocurrency exchange, faces legal backlash as the Department of Justice (DoJ) and the Commodity Futures Trading Commission (CFTC) accuse it of operating without a license and violating anti-money laundering (AML) regulations. The exchange experienced a massive $1.2 billion outflow following the allegations but reassured users of the safety of their assets. 

Despite a drop in its native token's value, KuCoin announced a $10 million airdrop as a gesture of appreciation to users. While under regulatory scrutiny, KuCoin's CEO, Johnny Lyu, emphasized the exchange's commitment to compliance and standardization as the crypto industry encounters growing pains.  

Global Legal Challenges Mount for Binance

Binance, the world's largest cryptocurrency exchange, faces mounting legal challenges globally. Nigeria's Federal Inland Revenue Service (FIRS) has accused Binance of tax evasion and pursuing criminal charges against the exchange and its executives. Similarly, the Philippines SEC has blocked Binance's operations due to lack of licensing, adding to the regulatory hurdles the exchange confronts. 

The Securities and Exchange Commission (SEC) in the U.S. is actively investigating Binance's operations, focusing on transparency and compliance. Additionally, Binance has decided to cease support for Tron's USDC tokens on the TRC20 standard, and its Russian operations have been transferred to CommEx due to regulatory and compliance issues.  

The Fallout from Sam Bankman-Fried's Sentencing

Sam Bankman-Fried, former CEO of FTX, was sentenced to 25 years in federal prison on charges related to the collapse of FTX and Alameda Research. Despite seeking a lesser sentence, the court emphasized the severity of his actions, including witness tampering and perjury, rejecting arguments of no financial loss due to planned repayments. Additionally, Bankman-Fried must forfeit $11 billion and will be under supervised release post-imprisonment, including mental health treatment. 

Public reaction varied, with many considering the sentence too lenient, highlighting the broader impact on victims and the crypto industry. Following the sentence, memecoins themed around Bankman-Fried experienced volatile trading, reflecting the event's significant attention. Meanwhile, FTX's estate plans to sell locked Solana balances at a substantial discount, indicating ongoing efforts to address the fallout. 

Bitcoin and Ethereum ETFs Attract Significant Interest

The interest in spot ETFs, both Bitcoin and Ethereum, is still there. The U.S. has its eleventh spot Bitcoin ETF after Hashdex converted its bitcoin futures fund into a spot ETF, trading under ticker DEFI, which can allocate up to 5% of its assets in bitcoin futures. BlackRock’s CEO Larry Fink deemed their iShares Bitcoin Trust the "fastest growing ETF in history," crossing $17B in assets. Hong Kong is advancing towards its first spot Bitcoin ETF, with Harvest Fund Management and Venture Smart Financial Holdings applying, reflecting the region's growing acceptance of bitcoin investment vehicles. Bitcoin ETFs have garnered over $12 billion in net inflows, demonstrating significant market interest. 

Fidelity and Bitwise have taken steps towards launching Ethereum ETFs despite regulatory uncertainties, with Fidelity filing a registration statement and Bitwise proposing an ETF amid challenges. BlackRock remains committed to pursuing a spot Ether ETF, even if Ethereum receives a securities designation, highlighting the firm's bullish outlook on cryptocurrency ETFs and the overall optimism for their integration into mainstream financial products.

Tokenization of Traditional Assets Expands

This is the week of RWA. Ondo Finance is transferring $95M of its OUSG token's backing assets to BlackRock's BUIDL fund for instant U.S. Treasury-backed token settlements, marking a significant enhancement in usability and speed for crypto investors. TrueFi introduces the TRI token, backed by interest-bearing assets for real-world asset trading, highlighting the expansion of blockchain applications into traditional finance. Over $1B in U.S. Treasury notes has been tokenized on public blockchains like Ethereum, indicating a growing interest in digital representations of government bonds for diversification and around-the-clock trading capabilities. 

HSBC launches the HSBC Gold Token for retail customers in Hong Kong, marking its entry into the real-world asset tokenization market and underlining a shift towards digital finance with regulatory backing. Diamonds arrive on the Avalanche network through a tokenized fund, making the $1.2 trillion natural resource accessible to investors in a tradable, convenient form and demonstrating the increasing popularity of tokenizing traditional assets for improved transparency and efficiency.

The Rising Influence of Meme Coins

The cryptocurrency landscape is witnessing a transformative phase with meme coins like Dogwifhat, which recently became the third largest by market cap, reaching a new high and surpassing Pepe, highlighting the sector's volatile yet potent appeal. The Arbitrum DAO’s proposal to establish a $3.3 million fund dedicated to supporting meme coins within its ecosystem aims to leverage their viral nature to enhance liquidity and user engagement, suggesting a strategic investment to invigorate growth. Concurrently, the Solana Foundation discussed implementing filters to manage offensive meme coins, indicating a move towards responsible governance. 

Amidst these developments, Dogecoin’s price rally to its 2-year high, fueled by rumors of integration with Elon Musk's X platform, showcases the impact of speculative trading and social media on meme coin valuations. Ethereum co-founder Vitalik Buterin's call for a "positive-sum" vision for meme coins, advocating for their potential to support public goods and charities, along with Maartje Bus from Messari highlighting their role as a "Trojan Horse" for crypto adoption, underscores the evolving narrative of meme coins from mere speculative assets to potential catalysts for broader engagement and innovation in the cryptocurrency space.

The Formation of the Superintelligence Collective

Fetch.ai, SingularityNET, and Ocean Protocol, three leading decentralized AI projects, announced plans to merge into the world's largest decentralized AI ecosystem, named the Superintelligence Collective. This merger, subject to community approval, seeks to accelerate progress toward decentralized Artificial General Intelligence (AGI) and Artificial Superintelligence (ASI), combining their technologies and products to build a scalable decentralized AI infrastructure. 

The proposed ASI token could rank among the 20 largest cryptocurrencies with a $7.5 billion valuation. Tether, the issuer of the world's largest stablecoin (USDT), is establishing an AI unit focusing on the development of open-source AI models and has commenced a recruitment drive for a head of AI research and an AI engineer. This expansion into AI, marked by an investment in Northern Data last year, aims to "redefine AI boundaries and democratize privacy-preserving open AI technology," according to CEO Paolo Ardoino.

SEC's Billion-Dollar Demand from Ripple

The SEC has requested a New York judge to impose a fine of $1.95 billion on Ripple Labs for violations of federal securities laws, including $876 million in disgorgement, $198 million in prejudgment interest, and an additional $876 million civil penalty. This comes after Ripple's institutional sales of XRP were deemed to violate US laws, while other sales did not. 

Ripple's CEO Brad Garlinghouse and CLO Stuart Alderoty criticized the SEC's excessive penalty demands and misuse of power, emphasizing the lack of allegations of fraud or recklessness. Ripple plans to vigorously respond to the SEC's actions next month, while community members argue that the SEC's lawsuit has harmed XRP holders more than Ripple, citing approximately $15 billion wiped from XRP's market cap and calling for the SEC to compensate holders.