2024-01-03 10:56

BRC-20 marketplace UniSat said it will follow a proposed change in the token standard that has met with opposition from Domo, the pseudonymous creator of BRC-20. A potential conflict emerged in the Bitcoin developer community on Tuesday after UniSat, one of the largest marketplaces for BRC-20 tokens, said it will follow a proposed change in the standard that's opposed by Domo, its pseudonymous creator. UniSat will "follow the Ordinals Jubilee upgrade, to confirm that BRC-20 is still on Ordinals without splitting into an isolated protocol," it said in a post on X (formerly Twitter). BRC-20 is a token standard on the Bitcoin network introduced last April that allows users to issue transferrable tokens in the form of inscriptions on small denominations of BTC. The tokens, also known as inscriptions, function on the Ordinals Protocol. UniSat's stance could lead to conflicting BRC-20 standards. In October, Domo suggested BRC-20 should not follow the upgrade of the Ordinals protocol, but be frozen at version 0.9. In response to UniSat, Domo said: "I believe rushing these updates in BRC20 is reckless, disregards their peer indexers, and could potentially harm the broader community of BRC20 users." Unisat said its actions would constitute not a fork, but a "split." "A 'split' here refers to that A (brc-20 freezed at 0.9) & B (Ordinals Jubilee) are splitting into different sets with different rules, but still residing in a same physical blockchain, intertwined with each other," the marketplace posted on X. A split is "much more hard to deal with than a 'fork,'" it said. With a split, the two forms can become "intertwined with each other, which open the Pandora’s box of numerous cross-affecting cases." Read More: Bitcoin Ordinals Token Ecosystem Emerges as Latest Crypto Play, Led by ORDI Hype https://www.coindesk.com/tech/2024/01/03/brc-20-marketplace-creator-take-opposing-positions-on-proposed-network-upgrade/

2024-01-03 10:17

Transaction volumes on the network overtook those for Solana-based applications, which boomed after a meme coin-led frenzy in December. Arbitrum’s ARB token neared $2 on Wednesday to set a record high and total value locked (TVL) topped $2.5 billion as traders seemingly trickled to the network in anticipation of it driving the next wave of gains in the crypto market. The price has climbed some 10% in the past 24 hours, beating the broader crypto market, while on-chain volumes on Arbitrum-based applications crossed $920 million. The CoinDesk Market Index dropped 1.7% in the same period. The Arbitrum influx overtook volumes of Solana-based applications, which boomed after a meme coin-led frenzy in December. Data from DefiLlama shows the TVL on Arbitrum-based applications has increased by $1 billion since October, alongside an increase in net inflows. Arbitrum’s token incentives appear to have contributed to increased attention toward ecosystem plays. In the past week, users of decentralized exchanges GMX and Gains Network have benefited from increased rewards and lower fees as part of the incentives plan – likely improving sentiment for ARB tokens. In October, Arbitrum distributed about $40 million worth of ARB tokens to projects that were built on the network as part of a short-term incentives plan, with projects receiving anywhere from a few thousand dollars to $30 million worth of ARB tokens. GMX bagged the most rewards at 12 million ARB, worth just over $10 million, followed by Gains Network at 7 million ARB. https://www.coindesk.com/markets/2024/01/03/arbitrum-token-sets-record-high-as-value-locked-crosses-25b/

2024-01-03 08:57

Concerns over contagion have triggered the need to "dig deeper into the links between banks and other financial firms," José Manuel Campa, the chair of the EBA told the FT. The European Banking Authority (EBA), the regulator that conducts stress tests on European Union banks, will take additional steps to predict how strains in non-bank financial institutions (NBFIs), including cryptocurrency-related entities, will affect the lenders, according to the Financial Times. Concern over contagion has triggered the need to "dig deeper into the links between banks and other financial firms," José Manuel Campa, EBA chair, said in an interview with the FT. "We should be doing more and we are going to be doing more. We need to have an understanding of the whole underlying chain in NBFIs.” According to the FT report, NBFIs hold around $219 trillion, almost half of the world's financial assets. The EBA has already taken some action to address the role crypto may play in stressing the system. In November, it published draft rules on liquidity and capital requirements for stablecoin issuers in line with the EU's new Markets in Crypto Assets (MiCA) regulation. It has also proposed rules that would see individuals with stakes of more than 10% in a crypto company vetted for convictions or sanctions and told crypto companies to watch for customers using privacy coins or self-hosted wallets to spot potential money laundering. The EBA conducts biennial stress tests on European lenders and assessments of the banks' balance sheet exposures to non-banks, Campa said. The latest move would be to work with the European Systemic Risk Board and Financial Stability Board to understand the impacts of a "shadow banking shock" to the wider system, the report said. Read More: EU Banking Watchdog Seeks Feedback on Draft Liquidity, Capital Rules for Stablecoin Issuers https://www.coindesk.com/policy/2024/01/03/eu-banking-watchdog-to-deepen-probe-of-links-between-banks-crypto-entities-ft/

2024-01-03 00:03

Saylor said earlier that he would use the proceedings from the sales to address personal obligations and buy more bitcoin to his personal account. MicroStrategy (MSTR) executive chairman Michael Saylor began to sell $216 million worth (at current prices) of company shares on Tuesday, according to a regulatory filing with the U.S. Securities and Exchange Commission. The document shows that Saylor intends to sell 310,000 shares. These shares were awarded as stock options in 2014 and were set to expire in April 2024. The sales plan was disclosed a couple of months ago, with Saylor saying during Microstrategy's third quarter earnings call that he plans to sell 5,000 shares per trading day commencing on Jan. 2. and continuing over four months, subject to a minimum price condition. That quarter's 10-Q filing said he can sell up to 400,000 shares of his vested options through April 26, 2024. "Exercising this option will allow me to address personal obligations as well as acquire additional bitcoin (BTC) to my personal account," Saylor said during the call. "I continue to be optimistic about MicroStrategy's prospects and should note that my equity stake in the company after these sales will remain very significant." MicroStrategy is the largest corporate holder of bitcoin with some 189,000 BTC in its treasury after the latest purchase in December, worth some $8,5 billion at current prices. Shares of MicroStrategy gained 8.5% Tuesday, defying a market-wide slump of cryptocurrency-focused stocks. Bitcoin's price has risen over recent months, trading around $45,000 as of press time (midnight UTC). Market participants expect a spot bitcoin exchange-traded fund (ETF) approval from the U.S. Securities and Exchange Commission in the coming weeks, which would increase potential exposure to the asset from retail and institutional investors. https://www.coindesk.com/business/2024/01/03/michael-saylor-commences-plan-to-sell-216m-worth-of-microstrategy-stock-options/

2024-01-02 16:49

With the expected launch of a spot bitcoin ETFs in Q1 of 2024, broader crypto is coming of age, says CoinDesk Indices head of research, Todd Groth. Looking back, 2023 was unmistakably a year of transition for the emergent asset class. Positioning, leverage and the speculative excesses from the previous market cycle were swept away in 2022, allowing for the seeds of the next cycle to sprout in 2023. What persisted and remains is a market with increased interoperability across protocols and projects, with builders and market participants catering to regulated institutional investors with an eye towards greater real-world utility. Once prominent crypto exchanges like FTX and Binance have seen changes in leadership, with more regulated players like Coinbase, Bullish (now owner of CoinDesk), and EDX leading the market. Meanwhile, traditional futures exchanges like CME are seeing growing volumes for bitcoin and ether-linked futures contracts (see chart below), which now exceed Binance in bitcoin futures open interest. We also witnessed renewed efforts in the U.S. to list spot token ETFs, with Blackrock surprising the market with its application to the SEC in June. This encouraging institutional development helped support the demand for bitcoin as a real asset and a currency debasement hedge for a financial system awash with fiat liquidity and supportive stimulus, strengthening the narrative of broader adoption for digital assets. The 2023 period was also one of reduced macroeconomic correlations across digital assets. Crypto was allowed to be crypto, and mostly decoupled from US equities and gold over the year (see rolling correlation chart above), albeit with lower levels of realized volatility than in prior years. Surprisingly, ether realized nearly the same level of volatility as bitcoin in 2023, breaking from the historical norm of generally realizing ~20% higher, with bitcoin’s volatility dropping towards levels akin to single stock volatility, and more in line with traditional asset classes. Collectively, these developments signal a maturation of the crypto market and an ongoing transition to an institutional landscape. This transition and broadening of the ecosystem towards more traditional, more regulated market participants is expected to lie at the core of the narrative for the next market cycle. Outlook for 2024 We expect 2024 will see further maturation of the crypto market towards institutional investors. This institutionalization is coinciding with a period of strong performance for bitcoin and ether, even during the ending stages of a U.S. interest rate hiking cycle and the decoupling from short term macro risk factors, suggesting that they are increasingly seen as unique real assets, similar to gold and oil. We anticipate these properties will boost demand for bitcoin and ether as liquid alternatives and diversifiers to traditional bonds, and help asset allocators reinvigorate their traditional stock/bond portfolios with a new and novel source of price appreciation. We expect the launch of a spot bitcoin ETF in Q1 of 2024. While this is a consensus view, we see it unlikely the approval will be the classic “buy the rumor, sell the news” event, over the medium to longer term horizon, as it allows for a significant new conduit of capital into the asset class through the familiar and regulated exchange traded product. Anyone who doubts the pent up demand for these assets in a more traditional, regulated wrapper should look to the performance of Coinbase and MicroStrategy stock over 2023, which both more than doubled the performance of bitcoin over the period (see chart below). These newly launched ETFs would make it easier for a broader range of investors, such as Registered Investment Advisors (RIAs), pension funds and hedge funds to gain exposure to the asset class, and allow investment bank structuring teams to build new products on top of the ETF vehicle. We believe these ETF inflows will provide a long term tailwind for the market that isn’t fully appreciated. With the current AUM managed by RIAs hovering around an estimated $128 Trillion in 2022 (source: Investment Advisor Association Outlook 2022), and assuming a 1-2% portfolio allocation to digital assets via a spot ETF product, this could bring an additional 1 to 2.5 Trillion of new capital into the crypto ecosystem. However, it's important to note that this potential influx of capital into the market via ETFs will be limited to bitcoin and ether, potentially further distinguishing them from smaller digital assets (i.e. “altcoins”). That being said, we do believe that appreciation from these two mega cap tokens will be distributed across the wider ecosystem into smaller protocols since they’re primary stores of values across the crypto native investors. If the U.S. economy enters a recession in the later half of 2024 due to the lagged effects of an accelerated rate hiking cycle and interest rates are cut in response, we would expect digital assets to benefit broadly from expected and anticipated stimulus measures. Bitcoin's digital scarcity, having gone through the 2024 Halving, would be increasingly appealing in an environment of further increasing federal deficits and spending. Ether's post-merge tokenomics have also become increasingly deflationary, further sweetening the appeal of Ether in this potential scenario. Under this macroeconomic backdrop, we would expect Smart Contract Platform, Decentralized Finance (DeFi) and Computing token sectors to be top performers in 2024, as all three of these sectors benefit from increased on-chain activity as they interplay together: Smart Contract Platform activities require the use of their native tokens for blockchain transactions DeFi tokens benefit from trading volumes and lending transaction fees Price oracle tokens within the Computing sector (such as Chainlink) deliver the required price data feeds across the blockchain ecosystem to facilitate transactions The Computing sector also contains protocols and projects focused on decentralized computing and AI themes, which are further supported by the ChatGPT, AI driven narrative, which lead the sector to outperform all others in 2023 and we should expect this to be a continued pillar of support for the sector into 2024. More info regarding crypto sector definitions here. While the recession and interest rate cut scenario might be a favorable macroeconomic setup for digital assets, it would be subject to periods of low liquidity and deleveraging. For this reason, we believe position sizing and portfolio construction will be more important in 2024 than calling market direction, and suggest our readers utilize CoinDesk’s Bitcoin and Ether Trend Indicators (BTI and ETI, respectively) when considering allocation decisions across the asset class. More info about BTI and ETI is available here and here. Investors should also consider their risk tolerance and time commitment when investing in digital assets. For those seeking more passive exposure, major tokens like Bitcoin and Ethereum, in their expected and regulated ETF wrappers, may be safer choices for many seeking to gain beta exposure to the asset class. Additional yield can be generated on top of ether positions through staking, with annualized staking rates and benchmark staking indices provided by our Composite Ether Staking Rate (CESR). More info about CESR is available here. For those seeking passive exposure to smaller tokens and protocols with greater growth potential, we’d suggest broadly diversified indices with limits on bitcoin and ether exposure to manage idiosyncratic token risk while tilting towards altcoins, which tend to benefit from the middle to later stages of a crypto bull market. In conclusion, we’ve exited the crypto winter with an ecosystem more robust than the previous cycle and with more supportive and broader narratives that should support the new market cycle well into 2024. Can't wait until next year's outlook? Check out coindeskmarkets.com or contact us to sign up for the CoinDesk Indices weekly research insights newsletter, "Vibe Check." https://www.coindesk.com/consensus-magazine/2024/01/02/crypto-market-outlook-2024-etfs-offer-tailwinds-for-other-digital-assets/

2024-01-02 12:39

The hacked funds remain "unmoved" according to Orbit Chain. Orbit Chain, a platform that communicates and transacts with various blockchains, has lost $81 million after hackers exploited the platform's cross-chain bridge. The project confirmed the hack in a post on X, saying a hacker funded a wallet using sanctioned privacy protocol Tornado Cash before attacking Orbit Chain's ethereum (ETH) vault. Proceeds of the hack were then sent to numerous Ethereum wallets. These wallets currently hold 26,741.6 ETH ($64 million) and around $18 million of the dai (DAI) stablecoin. Orbit Chain added that the funds are "unmoved." DefiLlama data shows that total value locked (TVL) on Orbit Chain dropped from $152 million to $71 million, with net outflows equalling $81.88 million. The platform's native token ORC slumped by more than 13% after the exploit. It has since recovered back to a $36 million market cap, according to CoinMarketCap. Cryptocurrency users lost nearly $2 billion to scams, rug pulls and hacks in 2023, researchers at security app De.Fi said in their annual report. While that's roughly half the amount of 2022, it's a sign that the industry remains susceptible to security risks, Metamask developer Taylor Monahan said the Orbit attack follows similar patterns to hacks carried out by North Korean hackers Lazarus Group, which has stolen $3 billion through hacks and exploits over the past six years, according to cybersecurity firm Recorded Future. https://www.coindesk.com/business/2024/01/02/orbit-chain-loses-81m-in-cross-chain-bridge-exploit/