All Been Crypto — Week 2 Feb 2024

We are up again above 1.7tn and BTC + 7% Wow and ETH +3%. LINK one of the biggest outperformers +29% on the flipside we had Lido, AAVE, MKR and Mantle all down single mid single digit. In ETH news GBTC outflows continue but slowed down while flows to other spot ETFs more stable netting consistent 200mm inflows past few days and bringing total net inflows to 1.4bn during first two weeks. More players cut fees to the 25bps benchmark. Hong Kong saw its first spot BTC filing. OPNX announced shutting down operations, XRP founder got hacked, JUP airdrops 700mm tokens and if you are looking for a sentiment indicator on whether funding is back — Pixelmon raised 8mm seed round…many of you will remember them for a project that got an F- for effort (see ABC March 2022) but seemingly turned things around now. Enjoy reading!

Bat Tai Chi — btc21@mail.com

HEADLINES:

Coinbases starting charging fees for USDC to USD conversions above 75mm

A move that has long been anticipated and potentially only the first. Coinbase will start charging larger clients for off ramping USDC into USD. Now this is for clients who convert more than 75mm and has exemptions for Clients that hold over $500 million of assets with Coinbase or keep an average balance of $100 million in USD or USDC over a calendar month will be exempt. It’s a strike to limit outflows of USDC which is by far the easiest and most convenient way for many in crypto to go back into Fiat. USDT always had 10bps ‘moat’ for redemptions and they even work with only a small subset of qualified minter/redeemers. Circle had allowed pretty much everyone to have an on/off ramp 1:1 and only last year started to limit this to corporations. Now this only covers conversions at Coinbase where the thinking is that they probably don’t have other routs and therefore are sticky enough to just bite the 10bps but the direction is clear. USDC has been bleeding market cap vs USDT ever since the Silicon Valley induced depegging event (see ABC 17 March 2023).

Binance and OKX launch Inscription marketplace

The large exchanges are jumping on the band wagon with not just listing the MEME coins themselves but actual inscription market places. Why? Well, let’s see directly OKX words. But first if you need some background here’s a good Block article on why and where inscriptions have taken off. ‘Why is this significant? Right now, the inscriptions landscape is fragmented across different blockchains and standards. For most users, navigating this complexity poses significant barriers to participation. Our vision at OKX has always been to drive mainstream adoption by making Web3 simple and easy to use, and we deliver with a unified, chain-agnostic platform that consolidates trading across leading inscription standards — all with zero trading fees. Users can easily mint, list, buy, and sell inscriptions across multiple blockchains in one seamless experience.’
This was earlier this week and then a few days later Binance followed hot on heels with a similar step. It’s all about user adoption if enough people demand it (trade it) then exchanges will list, and so it becomes more and more enshrined in the ecosystem. Will also mean though that native liquidity hubs might see outflows as these CEX aggressively compete on volumes with zero fee initiatives and the like.

Argentine government removes section on crypto legalization from its Omnibus Bill

This goes somewhat into domestic politics where I’m clearly no expert but is certainly a bit of a damper on everyone’s high hopes of the new political regime in Argentina wholeheartedly embracing crypto. There are a couple of hurdles and resistance and so unsurprisingly the biggest effort is not on crypto legislation. The Argentine government recently decided to remove the crypto declaration benefits from the omnibus bill, as reported by local media outlet iProUP. This means there will no longer be a special regime for declaring and regularizing undeclared crypto holdings. Introduced last month, the omnibus bill, titled ‘Law of Bases and Starting Points for the Freedom of Argentines,’ is President Javier Milei’s reform plans to tackle Argentina’s economic crisis. It presents a series of proposed monetary and fiscal measures that cover various assets, including crypto. The bill is still a work in progress and awaits discussion and approval from Congress. The particular adjustment was made to streamline the legislative process, focusing instead on measures with a broader consensus. Initially, the omnibus bill sought to establish a legal framework for taxpayers to declare and regularize previously undeclared assets, including crypto, under more favorable tax conditions. It included a phased approach that escalated penalties to incentivize early asset-holding declarations.

QUOTES:

In my view there are enough crypto specific catalysts (BTC halving, ETH spot ETF, massive airdrops, FTX recovery etc) to drive the market higher in the absence of any near term rate cuts. The rate cuts, when they come will only add fuel to the fire and drive the market into an eventual bubble in 2025.

Kelvin Koh — Spartan VC Founder

Yesterday, there was unauthorized access to a few of my personal XRP accounts (not Ripple) — we were quickly able to catch the problem and notify exchanges to freeze the affected addresses. Law enforcement is already involved.

Chris Larsen — Co-founder & Executive Chairman of Ripple

Of all the emergencies that aren’t, bitcoin mining (at most 1.5% of US power generation, generally targeting power that is underutilized or otherwise wasted) is the least urgent “emergency” ever

Nic Carter — Castle Island Venture