The latest minutes from the Federal Reserve reveal significant differences among officials regarding their views on inflation and the prospect of interest rate cuts. The minutes emphasize the “unusually high” uncertainty surrounding the future Fed policy path and maintain the option of raising interest rates. The consensus among officials is that the Fed has made “clear progress” in addressing inflation, but the speed of inflation easing across different sectors is uneven. The minutes reiterate that monetary policy should remain restrictive until inflation clearly and persistently falls to the Fed’s target. However, in a surprising and dovish statement during the press conference after the meeting, Federal Reserve Chair Powell sparked widespread expectations in the market for a substantial rate cut in 2024. The next Fed policy meeting is scheduled for January 30–31, 2024.
2. Crucial Week for Bitcoin Spot ETF
FOX Business reports that the U.S. Securities and Exchange Commission (SEC) held meetings on Wednesday with officials from major exchanges, including the New York Stock Exchange, Nasdaq, and the Chicago Options Exchange, to discuss the imminent approval of a Bitcoin spot ETF. These meetings are seen as a positive sign that the SEC is nearing approval for some or all of the applications submitted by over a dozen major asset management and crypto companies for the product. While a final decision has not been made, there are rumors that the SEC may start notifying issuers of approval from this Friday, with trading potentially commencing as early as next week. link
Matrixport’s latest report presents a rare perspective, forecasting that the SEC will reject all Bitcoin spot ETF proposals in January, with final approval potentially occurring in the second quarter of 2024. It also anticipates that after an SEC rejection, the price of Bitcoin could fall to $36,000 to $38,000, and advises investors to buy put options or even short Bitcoin directly. link
Matrixport co-founder Wu Jihan explains the market fluctuations caused by an analyst’s article, stating that analysts operate independently, expressing their opinions without any influence or interference from the management. Looking at the history and future prospects of Bitcoin, the current volatility, and the uncertainty of Bitcoin ETF approval are ultimately not crucial. In the long run, Bitcoin will always dominate. The approval of a spot ETF by the SEC is inevitable, attracting new investments into Bitcoin. Bitcoin is expected to consolidate its position as a store of value and a hedging asset, similar to gold. link
Goldman Sachs is reportedly in talks to become an Authorized Participant (AP) for proposed Bitcoin spot ETFs by BlackRock and Grayscale. The AP role involves creating and redeeming ETF shares to ensure the product trades in sync with its underlying assets. Last week, JPMorgan, Jane Street, and Cantor Fitzgerald announced they would act as APs for several firms seeking SEC approval to offer Bitcoin ETFs in the United States. A source from a large trading firm expects each Bitcoin ETF to eventually have 5 to 10 APs. link
Grayscale has announced the submission of an 8-A form for a Bitcoin spot ETF to the U.S. Securities and Exchange Commission (SEC). Bloomberg ETF analyst Eric Balchunas noted that the 8-A form does not equate to approval, but it is part of the regular preparation process. link
BitMEX founder Arthur Hayes has published a blog post stating that the RRP (reverse repo program) will be depleted in early March, the BTFP (Bank Term Funding Plan) will expire on March 12, and the Fed’s rate decision will be announced on March 20. He anticipates that Bitcoin will initially experience a significant drop along with broader financial markets but will rebound ahead of the Fed meeting. Hayes expects Bitcoin to undergo a 20% to 30% correction in early March. If spot ETFs begin trading and drive Bitcoin to surpass $60,000 and approach the 2021 all-time high of $70,000, a larger correction of 30% to 40% may occur due to liquidity drawdowns. link
K33 Research indicates that a decision on the Bitcoin spot ETF is expected between January 8 and January 10. The probability of a “sell-the-news” scenario is 75%, the probability of approval leading to an influx of funds and price increase is 20%, and the probability of the application being rejected is 5%. All signs point to traders facing significant risks ahead of the ruling, especially as derivatives have driven substantial premiums after Bitcoin’s continuous upward momentum over the past three months. link
3. U.S. SEC “Defaults” Ethereum as a Commodity, Ethereum Spot ETF Could Debut This Year link
Bloomberg ETF analyst James Seyffart suggested on January 4th, using CryptoQuant, that when the SEC approved Ethereum futures ETFs last year, it hinted at accepting ETH as a commodity, indicating the possibility of introducing an ETH spot ETF this year. The first Ethereum futures ETFs were listed in October of last year. If the SEC considers Ethereum a security, it may face disputes with the CFTC. In addition, the SEC’s final decision deadline for VanEck, ARK 21Shares, and Hashdex Ethereum spot ETFs is set for May 2024.
4. U.S. Government Currently Holds Bitcoin Valued at Approximately $8.3 Billion link
Less than three months ago, it had increased by $3.3 billion. Over the past two years, the U.S. government has seized a total of 207,189 bitcoins through three operations related to Silk Road, the hacker Jimmy Zhong, and the Bitfinex hack. If the U.S. government chooses to hold all the seized bitcoins instead of selling them, it would currently have approximately 400,000 bitcoins (worth $17.4 billion), almost double the current holding value.
5. U.S. Internal Revenue Service Mandates Brokers to Report Cryptocurrency Transactions Exceeding $10,000 link
The part of the Infrastructure Bill that requires many cryptocurrency exchanges and custodians to report crypto transactions over $10,000 to the Internal Revenue Service (IRS) has now become law as President Biden signed it into effect. Brokers are also required to report individual information about transactions, including the sender’s name, address, and social security number, to the IRS within 15 days. After the passage of the bill, many lawmakers have suggested additional legislation to “fix” the reporting requirements, claiming that the information brokers are required to collect is difficult or impossible to gather.
Bitget General Manager Gracy Chen Issues Open Letter link
Bitget CEO Gracy Chen published an open letter stating that the company’s staff increased from 1,100 to 1,500, and the user base grew from 8 million to 20 million in 2023. The company completed VASP registration in Poland and Lithuania and actively progressed with registrations in the Czech Republic, Turkey, Dubai, Bermuda, and other locations. Chen believes that BRC-20, ARC-20, and Bitcoin scalability are among the most promising areas to watch in 2024. The focus in 2024 will be on compliance, emerging markets, and Web3, with an accelerated expansion into new markets such as Latin America, Southeast Asia, and Africa.
(Sponsored by Bitget)
6. Binance’s Weekly Summary
a. U.S. Judge Again Rejects CZ’s Travel Permit Application link
The U.S. District Court for the Western District of Washington has rejected CZ’s “travel permit request” in a sealed order. This marks the court’s second restriction on CZ’s actions. Previously, U.S. Judge Richard Jones had ordered last month to temporarily stay the enforcement of allowing CZ to return to his home in the United Arab Emirates until the court resolves the government’s motion for review, citing the risk of flight.
b. The Wall Street Journal: He Yi Holds at Least 10% of Binance Shares link
According to earlier reports from The Wall Street Journal, He Yi holds at least a 10% stake in Binance (although another report suggested 8%). In early settlement discussions, the U.S. Department of Justice had hoped for He Yi to depart along with CZ, but this was ultimately not realized. The article states that He Yi’s sole interest is work, and she is strict. She criticized the ROI of sponsorship activities by Cristiano Ronaldo, leading to the dismissal of the responsible vice president. She also criticized the low viewership of reality shows and dismissed the producer.
c. Binance Adds Observation Tags to 10 Tokens Including MDX and XMR, Signaling Delisting Risk link
Binance has announced the addition of watchlist labels for ANT, FIRO, KP3R, MDX, MOB, REEF, VAI, XMR, ZEC, and ZEN. Additionally, GMX and SUSHI will have their seed labels removed. Binance officials state that tokens with monitoring labels may no longer meet listing standards and could be delisted from the platform. It’s worth noting that XMR, ZEC, and ZEN were recently delisted by OKX due to privacy concerns.
7. Net Inflows into Digital Asset Investment Products Reach $2.25 Billion in 2023, 2.7 Times More Than 2022 link
Digital asset investment products attracted $2.25 billion in inflows in 2023, marking a 2.7x increase from 2022, with the majority occurring in the final quarter. The total assets under management (AuM) rose by 129% for the year, reaching $51 billion, the highest level since March 2022. Bitcoin was the primary beneficiary, attracting $1.9 billion in inflows, representing 87% of the total. Ethereum (ETH) attracted $78 million, but its share relative to total AuM was only 0.7%. Solana attracted a total of $167 million in inflows, accounting for 20% of AuM.
8. Tether Emerges as the Tenth-Largest Holder of BTC link
A Tether address withdrew 8,888.88 BTC (approximately $379 million) from Bitfinex at 2:51 AM Beijing time on the 1st, becoming the tenth-largest BTC holding address. Currently, Tether holds a total of 66,465.2 BTC (approximately $2.82 billion), with a single coin cost of around $25,176 and unrealized gains of $1.148 billion (+68%).
9. Bitcoin BRC20 Founder Domo Criticizes Unisat Wallet for Seizing Protocol Control link
Bitcoin BRC20 founder Domo criticizes Unisat Wallet for seizing control of the protocol and pleads with the BRC20 community to reject Unisat’s proposed fork, urging to maintain the protocol in a non-profit, security-first manner. Unisat states that it must postpone the development of other tasks to ensure the Ordinals Jubilee upgrade of BRC-20 proceeds as expected. The current consensus is heavily leaning towards UniSat, especially given the listings of major BRC-20 assets on exchanges like OKX and Binance, making the stance of exchanges particularly crucial.
On January 5th, Domo tweeted that an agreement has been reached with UniSat and others to adopt version 0.14 of Ordinals. This means an acceptance of the BRC-20 following the Ordinals upgrade. Additionally, OKX, Binance, and UniSat have all released statements confirming their commitment to follow and support the Ordinals Jubilee upgrade, ensuring that BRC-20 remains on Ordinals without splitting into an isolated protocol.
10. January 3rd Marks the Fifteenth Anniversary of the Genesis Block of Bitcoin link
January 3rd marks the fifteenth anniversary of the birth of the Bitcoin genesis block. The Bitcoin genesis block was mined by Satoshi Nakamoto in the afternoon of January 3, 2009, yielding the world’s first Bitcoin. Satoshi Nakamoto embedded the message “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks” in the block.
Fundraising
- Binance Labs has announced an investment in the native ecosystem token, Memecoin (MEME), of Memeland. link
- KuCoin Labs has made a strategic investment in the Inscription Protocol cross-chain system (ISSP). link
Learn more, check out crypto-fundraising.info.
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