JAN3 CEO and Bitcoin enthusiast Samson Mow predicts an imminent substantial supply shock in Bitcoin, anticipating a potential surge to $1 million very soon. This projection relies on an anticipated supply shock resulting via the demand generated by recently sanctioned Bitcoin ETFs and ongoing market adjustments.

A Critical Few Months Ahead

Should institutions like BlackRock and MicroStrategy persist in acquiring BTC at a brisk pace, the supply could exhaust in approximately four months, rendering Bitcoin scarcer than ever before. Further complicating market dynamics is the impending Bitcoin Halving, an event historically influencing prices by reducing the rate of new BTC creation. The mining reward for new blocks is expected to be cut in half and be 3.125 BTC as compared to the current 6.25 BTC in roughly 90 to 120 days. This, combined with escalating demand and diminishing supply, might lead to an unparalleled price surge.

Mow subscribes to the Max Pain theory, an idea initially conceptualized by traditional financial markets, suggesting that price movements pertaining to BTC could result in maximum financial losses for a substantial number of market participants. In the crypto realm, this could manifest as abrupt and extreme price fluctuations, catching many traders and investors off guard.

Serious Consequences

Mow emphasizes the potential for a short squeeze in the near future, where an unexpected surge in the price of BTC compels short sellers to buy back at higher prices, further boosting the price. The concept aligns with the historical defiance of conventional market expectations shown by Bitcoin alongside its volatile nature.

According to Mow, a rapid ascent to $1 million would disrupt plans for nations and companies investing in Bitcoin, impact the usability of the Lightning Network due to high fees, and challenge the Stock-to-Flow (S2F) model used to predict the value of the flagship crypto.

He also outlines various consequences if Bitcoin were to quickly reach $1 million, including El Salvador missing the opportunity to issue Bitcoin bonds, major economists losing their jobs, Michael Saylor and MicroStrategy falling short of their supply acquisition goal, and a profound impact on the unprepared legacy financial system.

The crypto sphere remains consistently unpredictable, as evidenced by the recent adjustments to the crypto indexes of the Hong Kong Virtual Asset Consortium (HKVAC). XRP, once a leading contender in the global crypto arena, has been removed when it comes to the top five positions in the HKVAC Worldwide Crypto Index, making way for the ascendant Solana (SOL).

The Emergence Of Fresh Contenders

This reshuffling is not merely a numerical shift, it signifies a noteworthy transformation in the crypto landscape. In December 2023, Solana, distinguished by its innovative blockchain structure, surpassed XRP in market capitalization, prompting the HKVAC to favor Solana over XRP in its esteemed index.

The alterations do not end there. Avalanche (AVAX), another influential crypto player, has secured a place in the top 10 index, displacing TRX. While such volatility and swift changes are routine in the crypto world, they underscore the evolving interests of investors and the dynamics of the market.

Wider Significance And Outlook

Despite the raised eyebrows over the decision to exclude XRP, it is crucial to consider the broader picture. The aforementioned indexes serve as indicators for the crypto market, and recent modifications hint at a broader inclination toward diversification and acknowledgment of emerging technologies in the blockchain sector.

Notably, the Hong Kong crypto community remains vibrant, with the local financial regulator preparing for the introduction of spot crypto exchange-traded funds. This development, alongside the U.S. Securities and Exchange Commission recently approving multiple spot Bitcoin ETF applications, indicates increasing institutional interest in cryptocurrencies.

However, the Hong Kong Securities and Futures Commission has emphasized that crypto transactions by these ETFs must occur through SFC-licensed platforms or authorized financial institutions. This requirement underscores the significance of regulatory adherence and the necessity for a balanced approach to innovation and investor safeguarding in the crypto domain.

Bitcoin, despite the recent introduction of several ETFs, experienced a drop below $43,000 due to market corrections. After the approval of the first spot Bitcoin ETFs in the US, the price of BTC became volatile, reaching over $49,000 but quickly falling to around $43,000.

A Bright Future

The approval of the aforementioned Bitcoin ETFs saw $4.6 billion in trades, impacting crypto company stocks like MicroStrategy and Coinbase Global. Despite the price drop, experts remain positive about the future of both Bitcoin and crypto in general, viewing the decline as an opportunity to buy at lower prices and foreseeing a potential rise to $200,000.

While Bitcoin faces challenges, some altcoins like Ethereum have experienced smaller losses, while others like SOL and ADA have dropped significantly. The global crypto market cap has also decreased by $80 billion in a day.

Other Markets

Amidst a continuous decline in prices for various goods in China and subdued consumer demand, expectations for corporate earnings boosting the stock market are diminishing. Companies, encompassing various industries like electric vehicles to fast food, are competing with promotions to attract consumers amid concerns about job prospects and a persistent property slump.

Moreover, consumer prices have fallen for a third consecutive month, raising worries about corporate profits and share prices. Although China is likely to achieve its 2023 growth goal of about 5%, attention is now focused on potential challenges like deflation risks, the housing crisis, and a confidence crunch that could affect momentum this year. 

Elsewhere, oil prices increased after Britain and the United States launched military strikes against Houthi-controlled areas of Yemen, as tensions in the Red Sea rose further. West Texas Intermediate and Brent futures went up by more than 4% Friday morning, reaching their highest level since December 27th, 2023. Finally, crude oil prices in the US rose to $75.25 per barrel, while the global benchmark reached $80.75.

BlackRock CEO Larry Fink has undergone a significant shift in his perspective on cryptocurrencies and, notably, Bitcoin (BTC). In a recent media tour, Fink expressed a newfound appreciation for Bitcoin, emphasizing its role as a safeguard against authoritarian regimes. This transformation comes in the wake of the SEC recently approving 11 spot Bitcoin ETFs.

A Change In Tone

Contrary to his stance in 2017, when he, alongside Jamie Dimon, criticized Bitcoin, Fink now praises it as a long-term store of value, especially for individuals in countries where distrust in the government or concerns about currency devaluation exist.

Acknowledging the fact that the flagship crypto, alongside several altcoins, have previously been involved in illicit activities across the globe and continue to do so, Fink nevertheless points to the opportunities that adopting a more progressive approach toward the digital assets could present, citing a change in his viewpoint during the pandemic.

Slow And Steady

With the aforementioned approval of spot Bitcoin ETFs by the SEC, including those by BlackRock, Fink believes this step legitimizes Bitcoin and enhances safety. He contends that the critical question now is whether people will accept Bitcoin as a border-crossing asset.

In a separate interview, Fink expressed interest in an Ethereum ETF, emphasizing the significance of these developments as initial steps toward tokenization. However, Fink remained tight-lipped about potential future crypto-based ETFs, including Ethereum and XRP, choosing to not provide any further comments on the matter.

A potential disruption in Bitcoin (BTC) supply is looming, evident via on chain data revealing that approximately 57% of all BTC has remained inactive for a minimum of two years. Capriole Investments founder Charles Edwards highlighted this trend, emphasizing that the long term holders (LTHs), individuals holding Bitcoin for at least 155 days, include those with a substantial portion of the stagnant supply.

A Noteworthy Pattern

As a statistical observation, coins held by long term holders tend to remain untouched on the blockchain, showcasing a reluctance to move. The aforementioned two years segment comprises investors with an even more resolute commitment, as their holding period surpasses the 155 day mark.

Since the FTX collapse, the supply held by these LTHs has consistently achieved new all time highs, although the recent growth has slightly decelerated. Currently, approximately 57% of Bitcoin is under the control of these committed holders.

Supply Shock May Intensify

Charles Edwards underscores the significant impact of this situation, creating a substantial supply squeeze in the cryptocurrency market. He also draws attention to a historical pattern, noting that similar trends have preceded previous bull runs, indicated by green lines on the chart.

In a noteworthy development, the United States SEC recently granted approval for Bitcoin spot ETFs. Edwards suggests that this approval might intensify the supply shock, emphasizing that the ETFs are approved only for cash subscriptions, leading to a continuous reduction in available Bitcoin on the market. Additionally, chart analyst James V. Straten suggests that this approval could offer another perspective on the brewing supply shock in the asset.

The Ethereum Foundation plans to implement significant alterations to the account abstraction standard within Ethereum to minimize gas consumption, particularly for layer-2 solutions. On January 10th, 2024, a sneak peek of the substantial amendments to the ERC-4337 standard specification was revealed by the Ethereum Foundation. This specification addresses account abstraction, also recognized as smart accounts.

Streamlining The Process

The upcoming version 0.7 incorporates insights gathered over nine months of utilizing ERC-4337, as outlined by developer John Rising. The most notable modification pertains to the structure of account abstraction transactions, which are more intricate than typical Ethereum transactions. Now, these transactions necessitate the specification of five gas values instead of just one.

Rising clarified that the user has to designate multiple gas values to accommodate the fact that an account can perform computations while its signature is being verified. Rising further expounded on the rationale behind requiring more gas values. With smart accounts, he added, users can employ various signature types and pay for gas in diverse ways. Consequently, the gas required varies, and the transaction must delineate the amount willing to be spent for this validation.

Other Important Details

The updated specification will also impose a 10% penalty on users for all unused gas during execution, preventing apps when it comes to submitting transactions with unnecessarily high gas limits. Account abstraction, or smart accounts, extends the capabilities of basic Ethereum accounts by enabling them to possess programmable logic and rules, unlocking various use cases unattainable with conventional accounts.

While current Ethereum accounts are somewhat inert and fixed, account abstraction empowers them to become active and programmable. Proposed in September 2021 through EIP-4337 by Vitalik Buterin and other developers, the Ethereum Foundation has not disclosed a specific release date for version v0.7 but indicated that the security audit is commencing. Rising speculated that everything should be finalized by ETH Denver at the end of February this year.

Elon Musk recently engaged in a conversation with Ark Invest CEO Cathie Wood, expressing his views on Bitcoin at an X Space event. The Tesla CEO, while maintaining his generally indifferent stance toward the leading cryptocurrency, mentioned his openness to considering the use of Bitcoin on X. Musk likened Bitcoin to gold, emphasizing its unsuitability for transactions.

Musk Comes Clean

During the discussion, Musk disclosed both his personal holdings of Dogecoin as well as the fact that SpaceX owns Bitcoin. Regarding Bitcoin ETFs recently gaining regulatory approval in the United States, signaling a new phase for both Bitcoin and the broader crypto industry in general, Musk remarked on the immediate market impact. BTC saw its value surge to $47,500, influencing a broader uptick in the crypto market, including various altcoins.

Ulterior Motives

In response to the United States Securities and Exchange Commission recently tweeting about the approval of Bitcoin Spot Exchange-Traded Funds (ETFs), which was later said to be a false announcement after SEC Chair Gary Gensler stated that the account was hacked, Musk, who had been relatively silent about Dogecoin, reentered the conversation with the comment LFGDogeToTheMoon.

It is worth noting that in 2021, Tesla ceased accepting Bitcoin as payment for vehicle purchases due to concerns about the environmental impact associated with the cryptocurrency. In related news, X quietly removed a key feature for paid subscribers, as these users can no longer set an NFT as their profile picture. The feature was first introduced back in January 2022. 

The US Securities and Exchange Commission (SEC) recently approved various rule changes concerning the introduction of Bitcoin exchange-traded funds (ETFs) in the United States. This decision is expected to lead to the conversion of the Grayscale Bitcoin Trust, holding around $29 billion in cryptocurrency, into an ETF. Mainstream issuers like BlackRock and Fidelity are also likely to launch competing funds, with trading set to commence sometime this week.

This approval comes amid a year marked by significant law enforcement actions targeting crypto firms and industry leaders, including the conviction of FTX founder Sam Bankman-Fried and multiple actions against Binance and its founder Changpeng Zhao.

SEC Finally Comes Around

The approval is seen as a significant step in integrating crypto into mainstream finance, providing institutions and financial advisors with a familiar and regulated route to gain exposure to Bitcoin. Ark Invest CEO Cathie Wood expressed optimism about institutional interest, stating that the approval is a green light for institutions.

While the SEC has traditionally opposed spot Bitcoin funds, a shift in stance on ETFs emerged in 2023, potentially influenced by a court decision criticizing the SEC for blocking Bitcoin ETFs while allowing funds tracking BTC futures. SEC Chair Gary Gensler emphasized that the approval specifically applies to exchange-traded products (ETPs) holding Bitcoin, a non-security commodity. This approval does not signal a willingness to approve listing standards for crypto asset securities.

To The Moon

The optimism for approval gained momentum when BlackRock filed an ETF application in June, triggering a surge in applications by other firms. Over ten firms are in the formal process toward a launch, each competing for market leadership with varying expense ratios and marketing efforts. Some firms have already reduced their proposed fees. While not guaranteed, several BTC ETFs are expected to begin trading on the Cboe BZX exchange soon.

The anticipation of ETFs has influenced a recent surge in cryptocurrency prices, as advocates believe their introduction will stimulate demand via investors previously deterred by custody and exchange security concerns.

The PayPal stablecoin PYUSD is rapidly gaining traction in the DeFi sector. A newly introduced liquidity pool on the automated market maker (AMM) platform Curve, featuring PYUSD, has reached a total value locked (TVL) of $135 million. This pool, named FRAXPYUSD, was launched on December 27th, 2023, and includes FRAX algorithmic stablecoin alongside PYUSD.

Liquidity pools involve multiple cryptocurrencies locked in a smart contract, enabling decentralized exchange of assets. Curve, a popular decentralized exchange, is utilized by traders for stablecoin swaps, and its activity is indicative of significant transactions.

Getting Involved With Stablecoins

Traders using the FRAXPYUSD pool can exchange FRAX for PYUSD and then use the acquired coin on PayPal for various transactions. Currently, the pool exhibits an imbalance, with FRAX constituting over 80% of the total liquidity. According to Sam Kazemian, founder of Frax Finance, FRAX acts as on-chain liquidity for PYUSD, serving as a bridge between on-chain and off-chain transactions. Since its inception, the pool has averaged a daily trading volume of $5.5 million.

Despite being introduced in August, PYUSD is gradually making inroads into DeFi, although it trails behind leaders Tether and Circle. December data by Kaiko reveals that the daily trading volume of PYUSD reached $9 million but has recently stabilized around $4 million, significantly lower than the daily trading volume of Tether which exceeded $55 billion.

The Expansion Continues

Analysts note the positive growth in DeFi liquidity but highlight the competition by USDT and USDC, with PayPal seemingly investing in expanding the utility of PYUSD beyond payments. Clara Medalie, research director at Kaiko, sees potential in what PayPal is doing, stating that the company is enhancing the role of the stablecoin in crypto trading within and beyond PayPal itself.

Furthermore, Kazemian also anticipates further growth for FRAXPYUSD, with Frax Finance exploring decentralized finance integration supported by the PayPal payment app.

Gary Gensler, the Chairman of the United States Securities and Exchange Commission (SEC), recently disclosed that the official X (previously Twitter) account of the regulatory agency encountered a breach, disseminating inaccurate information about the endorsement of a spot Bitcoin exchange-traded fund (ETF).

A Crucial Week

The SEC government X account indeed faced a security breach, and an unauthorized tweet was published, Gensler stated. Nevertheless, the post erroneously proclaimed to a substantial audience that the regulatory body had sanctioned the spot Bitcoin ETF. This week is anticipated to bring a pivotal decision.

Although Gensler emphasized that the SEC has not greenlit the inclusion and trading of spot Bitcoin exchange-traded products, an outright refusal has not been made either. Due to this, the crypto community as well as a wide array of institutional investors remain hopeful that a Bitcoin ETF will be approved soon, despite the various delays.

Minimal Impact

The deadline for the SEC to announce the verdict on the ARK 21Shares spot Bitcoin ETF application is January 10th, 2024. Notwithstanding the optimistic initial announcement and subsequent correction, the impact on crypto prices across the board was in fact minimal.

While there was a marginal decline, the market has since steadied. This triggered speculation in the cryptocurrency community, prompting swift reactions on social media. As of the time of writing, BTC is trading at just below $46,000.

Interestingly, not everyone is convinced this was a breach. Eric Balchunas claims that although there is some evidence which could suggest a possible hack, he believes it may have originated within the SEC itself, possibly a scheduled tweet.

On behalf of the Web3 community, we would like to extend our warmest congratulations to the companies that announced their success in fundraising between 2nd-8th January, 2024. We are thrilled to see such tremendous support from all involved. Well done!

EZswap raised $2m - The EOS Network Foundation (ENF) is excited to announce that EOS Network Ventures (ENV) has strategically invested $500k into EZ Swap, contributing to its successful second fundraising round in December 2023

Solscan Pte. Ltd. raised $4m - Block explorer Etherscan has acquired Solscan, a prominent block explorer for the Solana ecosystem, in a move to &ldquoimprove the accessibility of blockchain data across multiple networks,

IISP raised an undisclosed amount - KuCoin Exchange Labs has announced its investment in ISSP. This investment is aimed at supporting the development of ISSP's ground-breaking inscription protocol, which operates on the cutting-edge Sui Network, known for its high throughput and scalability.

Power Pod raised $1m - The funds will be mainly utilized for hardware development and rigorous testing, the validation of the business model in select markets, and the cultivation of the network ecosystem.

DeMR raised an undisclosed amount - KuCoin Labs, the incubator and investment arm of the KuCoin ecosystem, has announced a strategic investment in DeMR, marking the beginning of a comprehensive collaboration in community operations and subsequent product development.

Bracket Labs raised $2m - Bracket Labs, a project that builds leveraged structured products on-chain with simple interfaces and innovative, adaptive pricing to vastly improve usability.

CharacterX raised $2.5m - A decentralized AI social network, announced a significant 2.8 million round with 30 million valuation co-led by Lightspeed Venture Partners, INCE Capital, and Spark Digital Capital.

TrendX raised $1m - Aims to be the preferred platform for the next billion users entering the Web3 domain, providing a comprehensive experience in project discovery, trend analysis, primary investment, and secondary trading through the combination of AI-driven trend tracking and smart trading.

To stay updated with news about future Web3 Funding Rounds, Follow CryptoWeekly.
 

CoinsPaid, a payment processor facilitating transactions between conventional finance-oriented companies and crypto-paying customers, recently experienced a breach. The platform reports facilitating about a million transactions monthly, valued at around 7 million EUR, and claims to have managed over 19 billion euros in crypto transactions.

Another Attack

The Estonian platform encountered its second significant security breach in half a year. The initial breach, transpiring on July 22nd, resulted in a $37.3 million loss. Following a post-mortem, investigators identified the Lazarus Group, which hails via North Korea, as responsible for the attack. Lazarus executed the breach by tricking a CoinsPaid employee during a fabricated job interview, leading to the downloading of malicious code facilitating unauthorized withdrawal requests.

Damage Control

Recently, the platform faced another breach, with blockchain cybersecurity firm Cyvers detecting unauthorized transactions involving USDT, USDC, ETH, BNB, and the native CPD token. Approximately $7.5 million was pilfered and directed to an external wallet, then rerouted to crypto exchanges like ChangeNOW, WhiteBit, MEXC, and others.

The modus operandi resembled the July breach, hinting at a potential oversight by CoinsPaid in fully eradicating any and all access by the bad actor. Despite the comparatively smaller scale of this attack, the stolen amount aligns with what CoinsPaid claims is its monthly transaction volume. The platform, however, has not issued an official statement on the recent incident.