Blockchain

As the final months of the year approach, the anticipation surrounding the approval of spot Bitcoin exchange-traded funds (ETFs) by the US Securities and Exchange Commission (SEC) has generated considerable excitement among analysts and traders.

While many stake their hopes on these index funds to fuel a significant price surge for Bitcoin and the broader crypto market, Matrixport, a digital assets financial services platform, offers a distinct perspective. According to their latest report, Matrixport firmly believes that Bitcoin and crypto prices are destined to soar in 2024, irrespective of the SEC’s decision on ETF approval.

Federal Reserve’s Rate Cuts As Catalyst? 

One influential factor identified by Matrixport is the recent declaration of victory by Jerome Powell, the Chairman of the US Federal Reserve (Fed), in the institution’s fight against inflation. 

Powell’s mention of possible rate cuts caught the attention of the digital asset platform, which noted in its report that Bitcoin prices jumped nearly 300% in 2019 when the Fed ended its hiking cycle and kept rates on hold for an extended period. 

Matrixport draws parallels to the present scenario, where the Fed projects three cuts, equivalent to 75 basis points, in 2024. 

Moreover, Matrixport’s analysis incorporates a proprietary inflation model presented a year ago, which projected a sharp decline in inflation from 8% to 3-4% by the end of 2023. This model instilled great confidence in the platform, suggesting that risk assets, including stocks and cryptocurrencies, would witness a substantial rally in 2023. 

Potential Decrease In CPI Strengthens BTC’s Role As Inflation Hedge

Matrixport’s proprietary inflation model also indicates the possibility of the US Consumer Price Index (CPI) dipping below 2% by the end of 2024. This prediction holds significant implications for Bitcoin’s price and its role as a potential hedge against inflation.

The CPI serves as a key measure of inflation, reflecting changes in the average prices of a basket of goods and services over time. A dip below 2% suggests a deceleration in the rate of price increases, potentially indicating a more subdued inflationary environment. 

In such a scenario, investors might seek alternative assets such as BTC that can preserve their purchasing power and shield them from the erosion of value caused by inflation.

SEC’s Bitcoin ETF Decision Irrelevant? 

Importantly, Matrixport emphasizes that even if the SEC maintains its disapproval of Bitcoin Spot ETFs in January 2024, higher crypto prices are still expected throughout the year. 

Furthermore, the report highlights the substantial growth of assets in US money market funds, which have doubled since the onset of the COVID-19 pandemic, reaching a staggering $6.1 trillion. This growth implies an additional $320 billion in interest rate payments per year, creating a potential influx of $370 billion annually or roughly $1 billion daily into risk assets such as stocks and cryptocurrencies.

Matrixport’s bullish outlook for 2024 also takes into account significant events on the horizon. The year marks a Bitcoin halving cycle, historically associated with substantial price increases averaging 192%. 

Additionally, 2024 is an election year, and the possibility of former President Donald Trump being reelected is considered high. Matrixport suggests that his policies could potentially bolster the US economy, thereby driving up stock prices and cryptocurrencies.

As of this writing, the largest cryptocurrency on the market is currently trading at $42,600, up 1.8% in the past 24 hours.

Featured image from Shutterstock, chart from TradingView.com

Back in August 2023, the Terra Classic community passed a proposal that would see 800 million USTC incinerated. This move came about as the community worked to help the token recover and be re-pegged back to the US dollar. Naturally, the proposal passed and the community prepared for the massive burn. That is until the plan hit a snag.

Terra Classic Validators Worried About Code Changes

The 800 million USTC mentioned in the proposal to be burned are the tokens held in the community treasury and managed by Risk Harbor. After the proposal was passed, the community turned toward carrying out the burn, until validators raised an issue with the plan.

According to Risk Harbor, they no longer had the keys to the wallet which happens to be a multi-sig wallet. So by default, these USTC coins are no longer accessible. But to burn the token, validators would be required to update the codes on their nodes and the legalities around this move have been questioned.

As a result of this, validators have begun to vote no to carrying out the burn, citing these legal issues. This is derailing the massive burn which is expected to reduce the token supply by around 8% in a single go.

In response to this, a Terra Classic validator known as Lunanauts has proposed what they say is a “legally absolved route” to completing the burn. Basically, Lunanauts has devised a way in which validators would not have to update the codes on their nodes and thus, avoid any legal issues.

Legal Way To Burn 800 Million USTC

In a proposal made on the Terra Classic community forum titled “Burn of 800m USTC Funds – legally absolved route,” Lunanauts suggests using a smart contract to actually burn the tokens. The objective of the proposal, Lunanauts explained, is to still carry out the burn but eliminate legal repercussions for validators.

The process would involve creating a smart contract carrying a “sole MsgSend to transfer all holdings to Anxu.” Once this is done, the multis contract can then be transferred via governance to the code id create. So there is no need for any code changes by validators. As Lunanauts explains, “The proposed method achieves the same effect as (proposal 11913) without requiring validator installations.”

Lunanauts’s ‘solution’ comes hot on the heels of Proposal 11832 which has taken another route to address validators’ legal concerns. The proposal wants to blacklist the multisig wallet holding the 800 million USTC instead, making it impossible to transfer tokens from that wallet.

The two proposals are currently going head to head. As always, token holders are able to vote on the proposal they want to support. Once voting ends, whatever proposal passes will determine what happens to the 800 million USTC in the community wallet.

Nevertheless, all of this is being done with the endgame of re-pegging USTC to the US dollar. The token is still trading about 96% below its peg with a 9.78 billion total supply.

Popular crypto analyst Dan Gambardello recently dropped a very bullish prediction for the Cardano (ADA) price. This analyst claims ADA is poised to surge to $11 in the next extended bull cycle, an incredible 1700% gain from its current price level.

Unlike many, the analyst didn’t just pull that prediction out of thin air. According to him, the prediction was solely based on ADA’s historical data and past actions.

$11 Cardano is a very realistic figure for bull market high based on new data I just discovered.

Video later explaining why.

— Dan Gambardello (@cryptorecruitr) December 12, 2023

Prediction Based on Historical Price Analysis

Cardano has had one of the best price gains among major altcoins this year. This price spike has brought in predictions from various analysts, with some predicting very bullish price points than others. According to a video shared by Gambardello, if history repeats itself, ADA could spike to a market cap of $400 billion by 2025.

How did he come by this number? Well, data has shown that the price of Cardano (ADA) has always correlated with Ethereum’s (ETH) past actions. A weekly timeframe chart shared by the analyst in a video on social media platform X showed that the last bull run in 2021 which saw ADA reach its current all-time high of $3.10 was a mirror of ETH’s performance in 2017. During the bull run in 2021, ADA spiked to a total market cap of $93 billion, a 75% correlation with ETH’s $123 billion at the 2017 peak.

It’s important to note that at this first stage, both Ethereum and Cardano weren’t well known for their DeFi capability. Now, it looks like ADA is getting ready to enter the 2021 Ethereum first DeFi bull cycle phase where it peaked at a market cap of $546 billion.

Cardano’s blockchain has grown since the first stage, with the network now one of the fastest-growing in terms of DeFi and smart contracts. If this cycle is consistent with the previous one, a 75% performance of ETH’s market cap peak will put that of ADA at $409 billion by 2025. At this point, ADA could speculatively be at a 4% total crypto market dominance and peak over $11.

Gambardello correctly predicted ADA’s all-time high of over $3 in June 2020, one year before the crypto reached this price point. The analyst also noted another scenario where the spike doesn’t mirror 75% of Ethereum’s DeFi cycle. According to him, a lesser market cap of $350 billion would put ADA at $10, way higher than its current all-time high.

Current State Of Cardano

ADA is currently on a 13.81% gain in the past 24 hours, boosted by a $1.5 billion increase in whale transactions. The crypto shot through to $0.6776, registering a new yearly high. At the time of writing, ADA is trading at $0.6527, a 73% increase from its December open of $0.376.

According to another social media post by Dan Gambardello, Cardano is now at a decision point between a continued increase to $0.75 and a retrace to $0.41.

On-chain data shows Ethereum has successfully found a rebound at a major support zone, a positive sign for the asset’s exploration at higher levels.

Ethereum Recently Made A Retest Of A Strong On-Chain Support Zone

In terms of on-chain analysis, the potential of any particular price range to act as support or resistance lies in the total number of investors who bought their coins inside said price range.

The reason behind that is the holders are more likely to react whenever the price retests their cost basis or acquisition price, which is obviously an important level to them since it can flip their profit-loss situation.

A single holder showing such a reaction won’t cause any effects on the market, naturally, but if a large number of investors share their cost basis inside a tight range, the asset’s retest of the range could perhaps produce a sizeable reaction.

Hence, the larger the concentration of investors inside a particular range, the higher the ability of said range to act as resistance/support. Analyst Ali shared this chart recently in an X post that showed how the various Ethereum price ranges looked like in terms of the amount of addresses who acquired their coins at them at the time of the post:

From the graph, it’s apparent that the $1,934 to $2,160 range is the Ethereum range that hosts the cost basis of the most amount of addresses. At the time Ali had made the post, Ethereum was retesting this range.

Now, since this range has such a high number of investors, a retest of it is probable to cause some reaction on the ETH price. But what kind of reaction would it be, support or resistance?

What decides this is the direction the price is retesting from. If the retest is from above, that is, these investors had been in profit just before the retest, then the market could feel some support.

This is because the holders might think this same price range could be profitable again in the future, so they might decide to participate in some accumulation at it.

Similarly, a retest from below could end up leading to resistance for Ethereum, as the investors might fear the asset dropping once more, so they could become more likely to sell.

Therefore, this huge range holding the cost basis of 5.85 million addresses should have acted as support for Ethereum during its latest retest. And indeed, since the retest, the asset has successfully found a rebound, as it has shot up towards higher levels.

As is visible in the chart, the ranges ahead up to the asset’s all-time high are all relatively thin with investors. This means that, thanks to the large support basis below, ETH shouldn’t have too much trouble traversing through these levels, at least in theory.

ETH Price

Since finding the rebound at the support range, Ethereum has climbed towards the $2,300 level.

XRP could well be on its way to having a significant price surge, as this crypto expert recently highlighted an indicator that suggests this is on the horizon. This will undoubtedly be a welcome development for the XRP community that, as of late been bewildered by XRP’s price action. 

XRP Forming A Bullish Pattern On The Charts

In a post shared on his X (formerly Twitter) platform, crypto researcher ABS of the 3T Warrior Academy highlighted the fact that XRP could be forming the largest bull flag in crypto history. This speculation was based on a monthly chart that he shared. From the chart, one could see that XRP was indeed forming a bull flag, which instantly signals a bullish sentiment. 

The crypto expert further went on to note how XRP has been trading below its all-time high (ATH) of $3.8 for “2,165 days & counting.” He alluded to the fact that this could have been a result of the label of “unregistered security,” which the SEC had put on it. 

However, Abs is bullish on XRP as he stated that there are “brighter days ahead” for the crypto token, considering that it has managed to get rid of the label and gained regulatory clarity. Another crypto analyst had also recently highlighted a similar pattern on the charts as he noted that the altcoin was forming a bull flag that could send its price to $25.

Many in the community seem to share this analyst’s sentiment as regards the price prediction. Abs had put out a poll under his initial post asking his followers what they think would be XRP’s peak price target when the breakout occurs. The majority of those who voted were of the opinion that XRP will be greater than $22.35 when the anticipated breakout occurs. 

Patience Is Key

Crypto analyst Egrag Crypto stated that patience is key as the XRP community awaits a significant rally from the crypto token. He made this comment while sharing an accompanying chart that indicates the future trajectory of XRP. From the chart, one could see that the analyst is predicting XRP’s long-awaited price surge to come in 2024. 

Based on his projection, XRP would rise to over $1.50 sometime between February and March 2024. He expects that XRP will experience a significant decline soon after, with the crypto token dropping to $0.7. However, the community will once again have reason to smile as the token will rise “to Valhalla” from that point on. Egrag predicts that will happen in June 2024. 

At the time of writing, XRP is trading at around $0.62, up over 3% in the last 24 hours, according to data from CoinMarketCap. 

Shiba Inu’s layer-2 blockchain Shibarium has breached the 100 million transaction milestone. This brought more exposure to SHIB which has led to a big jump in price. According to Coingecko, the token is up nearly 8% in the weekly, with the biggest bump happening in the bi-weekly timeframe at 23%. 

Shibarium’s recent achievement isn’t the only thing positive on SHIB this week. With the broader market seemingly ending the year on the green, Shiba Inu aims to follow suit. 

Shibarium In The New Age

According to Shibariumscan, the L2 chain has been experiencing an exponential jump since its official launch back in August this year. 

Today, December 14, daily transactions reached 7.36 million with the total transactions processed reaching 105.2 million. This growth can be attributed to the dev team’s recent activities behind the scenes. 

This year, Shibarium is set to transition from the Goerli Network to the Sepolia Network as its layer 1 chain. 

“This strategic shift is instrumental in ensuring that developers have access to a reliable and consistent platform for testing their dApps and smart contracts. This is planned to go live [on] December 15th, 2023 by which the current Puppynet will stop working,” the dev team announced earlier this month.

According to the blog post, SHIB burns come in two phases: manual and automatic. As of writing, Shibarium is in the manual phase with an estimated 3 massive manual burns coming this month. This would further decrease the supply available on the market, placing upward pressure on SHIB’s price.

Another influence on SHIB’s price is the broader market rally observed in the past few days. Coingecko data shows that the market is up nearly 6% in the daily timeframe. If this trend continues, SHIB will continue to give gains to the bulls. 

Bulls Aim To Knock Another Zero Off

SHIB is currently on its way to knock another zero off of its price as the bulls break through the $0.00000997 price level. If the bulls can stabilize the token at this price point, further gains can be speculated shortly. 

However, the over-reliance of SHIB’s price action on major coins like ETH and BTC might be a problem in the long term. As of writing, the market’s current trajectory is held only Bitcoin’s very bullish past few days. If this streak ends, SHIB will face a very bloody week. 

Featured image from Shutterstock

On-chain data shows the cryptocurrency capital inflows currently look similar to December 2020, right before Bitcoin rallied from $18,000 to $65,000.

Bitcoin & Ethereum Are Getting $19.7 Billion In Capital Injections Currently

As explained by analyst Ali in a new post on X, Bitcoin and Ethereum are receiving a large amount of capital inflows currently. To showcase these positive flows, the analyst has referred to the “BTC + ETH Net Position Change” indicator from the on-chain analytics firm Glassnode.

What this metric does is that it keeps track of the 30-day change taking place in the combined realized cap of these top two cryptocurrencies. The “realized cap” here basically refers to the total amount of capital (in USD) that investors have used to purchase a given asset.

As such, the metric’s net position change could provide hints about whether the total money invested into the coin in question has gone up or down during the past month.

Now, here is a chart that shows the trend in this indicator for Bitcoin and Ethereum over the past few years:

As displayed in the above graph, the Bitcoin + Ethereum Net Position Change has been inside the positive territory recently and has only been climbing up. The trend naturally makes sense, as both of the assets have registered some sharp rises during the past month.

Currently, the indicator has a value of $19.7 billion. As Ali has pointed out, “This is around the same capital inflow we saw back in December 2020 before BTC surged from $18,000 to $65,000!”

In the same chart, data for two other metrics is also shown. The first is the “Stablecoin Net Position Change,” which, as its name suggests, keeps track of the monthly inflows and outflows for the major USD stablecoins in the sector.

Unlike Bitcoin and Ethereum, though, this metric doesn’t make use of the realized cap, but simply the supply of the stables. This is obviously due to the fact that these coins have mostly the same value at all points, so the realized cap wouldn’t be any different from the market cap (which itself is equivalent to the supply as the price is $1).

From the chart, it’s visible that the stablecoins have also enjoyed positive inflows recently. This means that all three major asset classes in the sector, Bitcoin, Ethereum, and the stables, are receiving capital injections currently.

Most of the capital inflows and outflows towards the cryptocurrency sector happen through these three. The altcoins only receive their capital through a rotation from these core assets.

Thus, the stablecoins and top two cryptocurrencies simultaneously enjoying positive inflows have historically been a very bullish combination for the sector as a whole. This constructive combination didn’t form for most of this year but finally has during this latest leg in the rally.

The last indicator on the chart keeps track of the net incomings and outgoings from the sector as a whole by simply summing up the netflows for BTC + ETH and the stables. As is apparent, this metric also has a value similar to December 2020 at the moment.

Looking at Bitcoin’s historical performance following December 2020, it could mean that the BTC price is set for another price surge going forward.

BTC Price

Bitcoin had recovered above the $43,000 level just earlier, but it appears the coin has seen a setback as it’s now once again trading below the mark.

In a significant blow to the decentralized finance (DeFi) sector, the Sushi DeFi protocol has fallen victim to its second exploit this year.

The protocol’s Chief Technology Officer (CTO), Matthew Lilley, has issued a stark warning to users, advising them to refrain from using any decentralized applications (dApps) until further notice.

Sushi And Zapper Frontends Compromised

The latest breach has prompted concerns about the security and integrity of the Sushi DeFi protocol and other associated dApps. According to Lilley, a widely-used web3 connector has been compromised, allowing malicious code injection that affects numerous dApps. 

Specifically, dApps that use the LedgerHQ/connect-kit, a dApp that allows users to connect other dApps to their Ledger hardware wallets, are considered vulnerable. Notably, Lilley’s warning underscores the severity of the situation, emphasizing that this is not an isolated attack, but a large-scale assault targeting multiple dApps.

Further investigation by security experts has revealed a potential supply chain attack on the ledger connect kit. The attacker allegedly successfully injected a wallet-draining payload into the popular Node Package Manager (NPM), impacting several prominent dApps, including Hey and others. 

Additionally, it has been discovered that the Zapper and Sushi frontends have been hijacked, exacerbating the scope of the breach.

Slowmist, a module of Ledger, further confirmed that their system was hijacked and tampered with during the supply chain attack. This compromised the integrity of the ledgerhq/connect-kit library, which is relied upon by many dApps. 

As a result, users are urged to exercise caution when conducting any dApp-related operations and to scrutinize requests for wallet information that may appear unexpected.

Malicious Connect Kit Neutralized? 

In an official statement, Ledger has confirmed the identification and removal of a malicious version of the Ledger Connect Kit. The company assures users that their Ledger devices and Ledger Live remain uncompromised. 

The company stated that a genuine version of the Connect Kit is currently being pushed to replace the malicious file. Ledger advises users to refrain from interacting with any dApps at the moment for their safety. 

The company pledges to provide updates as the situation develops, ensuring users stay informed about the ongoing efforts to address the security breach.

SUSHI’s Uptrend Threatened By Exploit Fallout

In light of recent events affecting the Sushi DeFi protocol, its native token, SUSHI, has experienced a decline of over 4% within the past hour, reaching a low of $1.590. 

Before the exploit, SUSHI had been exhibiting a notable uptrend structure on its 1-day chart, marked by higher highs and higher lows. However, with the loss of its crucial support level at $1.961, there is a potential invalidation of the previously established uptrend. 

The uncertainty surrounding the protocol’s native token raises the possibility of further downside in SUSHI’s price action. If a sustained downtrend continues, the next significant support level for SUSHI is located at $1.084. 

Featured image from Shutterstock, chart from TradingView.com 

Ethereum has seen its deflationary status once again in the limelight as the network continues to see a significant decline in the number of ETH tokens in circulation. This comes on the back of the belief that the bull run and some other factors could help uphold this trend. 

More ETH Goes Out Of Circulation

According to data from Ultrasound Money, Ethereum has seen a decrease in its circulating supply in the last seven days, with over 14,160 ETH going out of circulation. This is a result of over 30,700 being burned during this period while only just over 16,500 ETH have been issued during this same timeframe. 

This development continues a growing trend where the number of tokens being burned outpaces the number of tokens being issued. NewsBTC had reported earlier this month how over 106,000 ETH had been burned in the last 30 days (between November 4 and December 4). At the same time, only just over 70,000 ETH had been issued. 

This deflationary trend has been attributed to the increasing number of validators exiting the Ethereum ecosystem. This trend is said to have begun at the start of October. Glassnode noted that the average number of validators exiting per day surged from 309 to 1018 validators per day at the start of October. 

This isn’t the only contributing factor, as network activity on Ethereum has picked up significantly. According to data from Etherscan, the daily number of transactions on the network has stood over a million in the last seven days. This has caused a spike in gas fees, causing more ETH to be burned with the EIP-1559 protocol.  

Ethereum Deflationary Trend Expected To Continue

It is no coincidence that network activity on Ethereum has picked up as many continue to position themselves ahead of the imminent bull run, which is projected to kickstart in 2024. The recent surge in the trading volume of non-fungible tokens (NFTs) on Ethereum has also been a big factor. This is expected to continue once the bull market takes its full course. 

Another factor to consider is the fact that more liquidity is expected to flow into the Ethereum ecosystem if the pending Ethereum Spot ETFs applications get approved. This would likely spark a further increase in the trading activity on the network as many will look to invest in the second-largest cryptocurrency by market cap. 

ETH investors will undoubtedly be delighted at the fact that the future trajectory of ETH looks bullish. One can expect the crypto token’s value to rise as it continues to maintain this deflationary status. The less ETH in circulation, the more valuable it likely will be. 

At the time of writing, Ethereum is trading at around $2,270, up by over 4% in the last 24 hours, according to data from CoinMarketCap. 

Recent reports have revealed that the United States Securities and Exchange Commission (SEC) has implemented a “new regulatory standard” for all Bitcoin Spot Exchange-Traded Fund (ETF) applicants while awaiting approval from the regulatory body.

Cash Redemption Model For Bitcoin ETF Applicants

Top Bloomberg Analyst James Seyffart took to X (formerly Twitter) to share the latest update by the regulatory watchdog. According to him, every Bitcoin Spot ETF applicant will have to bend their knees to this new model.

The SEC’s latest “Cash Redemption Model” came amid the spot Bitcoin ETF issuers ironing their filings with the US regulator. It seems that the SEC is unwavering in its demand, rather than approve the different model that other issuers have suggested.

The model enables authorized participants to deposit funds in the ETF equal to the net asset value of the creation units to be created. The underlying assets, which in this case is Bitcoin, are subsequently purchased by the fund using this money.

Seyffart’s X post was accompanied by another post from financial lawyer Scott Johnsson, who initially shared the update. The financial lawyer shared a screenshot which revealed more details about the new model by the regulatory body.

Johnsson asserted that Invesco is the most recent company to adopt the cash creation and redemption standard for its ETF. The trust anticipates that “creation and redemption transactions will be made in cash at first.”

However, in the future, the Trust may permit/require creation and redemption transactions to be carried out with the “in-kind” model. This is the initial model that several ETF applicants have suggested.

For the in-kind model, the participant deposits a collection of securities that are weighted and composed in accordance with the ETF’s portfolio. This will allow investors to receive creation units from the fund without having to sell the securities for cash instantly.

Bloomberg Senior ETF analyst, Eric Balchunas has also confirmed Invesco’s adoption of the latest cash model. The analyst asserted that the firm is embracing the initiative as per its just updated S-1 filing.

Blackrock’s In-Kind Redemption Model

Blackrock recently adjusted its Spot Bitcoin Exchange-Traded Fund (ETF) application introducing an in-kind redemption model called “Prepay.” This is to tackle the restrictions that financial firms are facing in order to hold cryptocurrencies.

The adjustment aims to make it easier for Wall Street Banks to participate in the fund. With this modification, authorized participants (APs) would be allowed to issue new fund shares using cash instead of just Bitcoin. 

The funds that the APs use for this procedure can subsequently be converted into Bitcoin through an intermediary and kept in storage by the ETF’s custody provider. As a result of this, it provides access to banks that are unable to store cryptocurrencies directly. 

So far, Blackrock believes the model will offer greater protection against market manipulation, which has since been the major reason behind the SEC’s rejection of an ETF.