Weekly Rollup - September 24, 2024

• Markets responded positively to the Fed’s 50 basis-point rate cut.
• The US Securities and Exchange Commission (SEC) approved options trading for BlackRock’s spot bitcoin ETF.
• Satoshi-era bitcoin wallets record activity for the first time in 15 years.
• A US judge has dismissed Consensys’s case against the SEC.

Macro Market Updates:

Markets spent much of the week awaiting the US Federal Reserve’s rate decision on Wednesday. For the first time in four years, the US Federal Funds Rate was cut by 50 basis points to 5% . In his statement, Federal Reserve Governor Jerome Powell cited the central bank’s confidence that inflation is cooling as a key reason for the rate cut while mentioning that it marks the beginning of a “recalibration” of monetary policy in the US.

Critics have suggested that the rate cut was politically motivated and strategically timed ahead of the US Presidential election on Tuesday, 5 November 2024. Markets responded with a rally. Bitcoin gained 4% , and the S&P500 rose to a record high following the news. Gold also hit a new all-time high, climbing to over US$2,620 to end the week. The gains across the crypto and traditional finance markets are presumably due to the positive sentiment around the increased liquidity that enters financial markets when monetary policy is easing.

Elsewhere, there weren’t too many surprises in macro data:

• The Bank of England left rates on hold at 5% .
• Canada’s consumer price index (CPI) came in just under forecast at 2% on a year-over-year basis in August.
• Unemployment claims in the US came in 11,000 lower than forecast at 219,000 .
• Australia’s unemployment rate came in as forecast at 4.2% .

Crypto Market Sectors:

Sector growth across the crypto market was strong this week. Average performance stood at 16.4%, with almost all sectors experiencing some degree of growth. Leading the way was data availability, AI and data services. With markets responding positively to the US Federal Reserve’s rate cut, newer technologies such as artificial intelligence (AI) are making gains again. One of the biggest AI gainers for the week was Bittensor (TAO), with growth of 83.1%. The Bittensor network helps developers build customised and production-ready AI and machine learning models.

In data availability, the biggest market sector gainer for the week was NEAR Protocol (NEAR), gaining 32.7% over the last seven days. NEAR is among other data availability and AI tokens, including Bittensor (TAO), Filecoin (FIL), Livepeer (LPT) and Render (RNDR), that Grayscale has invested in as part of the Grayscale Decentralised AI Fund that launched in July. With monetary policy in the US easing and major financial institutions investing in these technologies, they may see further upside as more liquidity enters markets over the coming months. This also coincides with the increasingly rapid sophistication of AI-driven technologies.

Bitcoin moved to the upside this week, presumably in response to the US Federal Reserve delivering a rate cut on Wednesday. Opening the week at US$59,286, bitcoin gained over 9% to finish the week at US$63,663. The next key level is at US$65,500. It has been a critical area of support and resistance since the start of 2024.

It was another week of inflows for bitcoin asset investment products. A total of US$284 million flowed into these products. Short-bitcoin saw inflows of US$5.1 million, possibly due to slowing momentum on the week’s bullish run.

Also this week, former President Donald Trump purchased burgers from Pubkey using bitcoin. The popular New York City bar is known for accepting bitcoin payments, and Trump used the occasion to tell attendees that the Republican Party’s policy stance on crypto fosters innovation. A few days later, Vice President and Democratic presidential nominee Kamala Harris made her first public statement about cryptocurrency. She said that a Harris administration would “encourage innovative technologies like AI and digital assets while protecting our consumers and investors.”

For the second week in a row, MicroStrategy made another big bitcoin purchase. The company’s CEO and bitcoin fanatic, Michael Saylor, announced in a post on X that the company had purchased 7,420 bitcoins at a cost of around US$489 million. MicroStrategy now holds over 252,000 bitcoins, which is worth more than US$15 billion. The firm’s average purchase price is US$38,585 per bitcoin.

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The second biggest cryptocurrency by market cap saw significant gains this week. Opening the week at US$2,313 and rallying over 16%, Ethereum broke the key level of US$2,320 to the upside.

This week’s gains are presumably due to the interest rate cut out of the US and positive sentiment following Vitalik Buterin’s speaking engagement at the Network State Conference in Singapore. In his presentation, Buterin outlined his “popup city” or “network states” concept and shared the results of Zuzala , an experiment bringing together people from the online Ethereum community to form a physical community and have political autonomy. He concluded that “popup cities” have “product-market fit” but require more work to ensure governance and membership remain conducive to progress.

Ethereum investment products had another tough week, with outflows totalling US$29 million . This marks the fifth consecutive week of outflows for these products. The majority of outflows are from Grayscale’s incumbent fund, which saw US$65 million of outflows this week across all of its digital asset investment products.

Atomic DeFi

• For the third week in a row, Reef (REEF) saw significant gains. Price for the layer-1 blockchain gained 91.2%, taking its market cap to US$102 million. A large proportion of this week’s gains happened on Thursday when the team announced that REEF had been listed on cryptocurrency exchange StealthEX.
• Multibit (MUBI) saw gains of 65.4%, which takes its market cap to US$33.8 million. The gains are likely due to the continuous growth in bridging volume on the network. Multibit is currently the most adopted bridge by volume in the BRC20 ecosystem, bridging USD$463.5 million of ecosystem assets. The recent gains follow declines of over 90% in the price of MUBI since April.

Layer-1 gains

• Bittensor (TAO) gained 83.1%, taking its market cap to US$4.1 billion. The machine learning network has seen the price of its native token, TAO, gain almost 45% in the last four weeks. This week’s gains presumably occurred due to price moving quickly past key liquidity zones to the upside. This price action, coupled with increasing institutional investment and interest in AI, is likely driving further upward momentum.
• Sui (SUI) saw gains of 47.7%. This takes its market cap to US$4 billion. The gains are presumably due to strong technical price action and recent announcements that demonstrate the network’s progress. This week, the team announced that Circle’s native $USDC will be coming to the Sui network, and a cross-chain transfer protocol will be launched to help developers build cross-chain flows from other networks.

CeFi upside

• VGX Token (VGX) gained 71.8%, taking its market cap to US$11.8 million. The price of the cross-chain gaming token surged by over 60% on Saturday, 21 September alone. This is presumably due to the announcement that the team’s developers have been revitalising the Safe Moon wallet . VGX is currently trading at US$0.03195.

Smart multi-chain gains

• Saga (SAGA) gained 73.8%. This takes its market cap to US$260 million. The gains are presumably due to a handful of updates shared this week, outlining how the network will find product-market fit as the crypto market continues to grow. The layer-1 network is drawing inspiration from Apple’s Apps Store as a model to attract developers to build on Saga’s near-zero cost network to promote “experimentation and innovation ”.

Digital asset investment products saw a second consecutive week of inflows, with US$321 million entering funds. This marks a 9% increase in assets under management from the week prior. The growth is presumably due to the rate cut out of the US. Investment product volumes also saw an uptick of 9%, bringing volumes to US$9.5 billion. The US led the way with inflows, accounting for US$277 million of the week's flows into digital asset investment products.

• The long-awaited Frankendancer update is now live on Solana’s mainnet, while the Firedancer Solana validator client has gone live on the testnet. Led by Jump Crypto, the Firedancer project aims to solve Solana’s scaling challenges. Historically, Solana has experienced network outages and bottlenecks due to issues with processing data on the network. Frankendancer is a hybrid of the Firedancer technology and Agave validator code. By opting for a hybrid configuration, improvements can be delivered to the network before the Firedancer validator is ready to be deployed. Solana (SOL) gained 7% on the news, while trading volume spiked 8% following the announcement. Solana is currently trading at US$144.59.
• A handful of Satoshi-era bitcoin wallets (those that have been dormant since bitcoin’s early days) have been active for the first time in over 15 years. According to on-chain data, at least five separate bitcoin block rewards moved to new addresses this week. The rewards were generated around January 2009, coinciding with when the bitcoin network went live. In total, 250 bitcoin were moved to other wallets. Some speculate that the movements signal imminent selling activity, while others suggest it may be a defensive response to a user’s private keys recently being leaked from a Bitcoin Core wallet.
• Former Coinbase, Circle and Goldman Sachs executives have launched True Market , which is a stablecoin-native and non-custodial crypto trading platform. The preferred stablecoin for settlements on the platform is PayPal’s PYUSD. Having successfully closed a US$9 million seed round, Co-Founder and CEO Vishal Gupta said in a press release that, “Clients now demand the security of true segregation of execution and custody. Our team has worked diligently to meet these needs, leveraging the power of stablecoins to facilitate efficient liquidity and settlement solutions.” Investors in the seed round include the Solana Foundation, Layer-1 network Aptos, and a handful of venture capital firms, including RRE Ventures, Reciprocal Ventures, Hack VC and Paxos.

• The US SEC has approved options trading for BlackRock’s spot bitcoin exchange-traded fund (ETF). The notice issued by the SEC outlines that options trading for the firm’s iShares Bitcoin Trust will trade as “IBIT” on the Nasdaq. The Office of the Comptroller of the Currency (OCC) and Commodity Futures Trading Commission (CFTC) still need to complete their respective approvals before the product can be officially listed.
• Judge Reed O’Connor for the US District Court for the Northern District of Texas has dismissed a case that Consensys brought against the SEC. The blockchain and web3 development company sued the SEC in April partly due to the agency categorising ETH as a security and regulatory concern around MetaMask, the company’s crypto wallet software. In June, the SEC notified Consensys that it was closing its investigation into Ethereum, but the company sought to continue the case as it wanted a "declaration that offering the user interface software, MetaMask Swaps and Staking, does not violate the securities laws .” Finally, in July, the SEC sued Consensys as the company failed to register as a broker for its Metamask swaps service.

Enjoy our crypto market outlook for Q4 2024 and beyond amidst the backdrop of the U.S. presidential election, falling interest rates, and geopolitical tensions.

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