ETFs, Trials, Shakedowns
ETF Reviews, Reddit's Token Exit, and FTX's Courtroom Drama
Welcome to the Coinfeeds Daily Digest, your home for the top crypto news stories of the day. In today's edition, we cover major stories including potential Bitcoin ETF approvals, Reddit's discontinuation of blockchain rewards, revelations from the FTX trial, updates on Ethereum scaling solutions, regulatory challenges, and more.
Market Update
News
Spot Bitcoin ETF Applications Under SEC Review
The SEC is reviewing several applications for spot Bitcoin ETFs. Approvals could come as early as March 2024. Analysts predict over $150 billion could flow into Bitcoin from these ETFs, potentially pushing its price over $50,000. The influx of institutional money could increase Bitcoin's market capitalization dramatically. Recent amendments to filings by Fidelity, Ark Invest and Invesco suggest ongoing discussions with the SEC.
Reddit's Crypto-Powered Community Points Program Shutdown
Reddit is discontinuing its blockchain-based Community Points program due to scalability issues and regulatory challenges. The program, which rewarded users with Ethereum-based tokens for their engagement within select subreddits, will be completely shut down by November 8, 2023. The decision has led to a significant drop in the value of tokens associated with different Reddit communities, such as Moons, Bricks, and Donuts. Jesse Powell, co-founder of crypto exchange Kraken, has criticized Reddit's decision, suggesting alternative means of redeeming the tokens.
FTX's Legal Battles and Sponsorship Deals Unveiled in SBF Trial
The ongoing trial of Sam Bankman-Fried, former CEO of FTX, has revealed details about the exchange's sponsorship deals and meetings with powerful figures. Evidence presented in court shows that FTX agreed to pay Riot Games nearly $100 million and also made big deals with Tomorrowland and Coachella. Bankman-Fried's calendar also reveals meetings with former President Bill Clinton, New York Governor Kathy Hochul, and New York City Mayor Eric Adams, just before the exchange's collapse. The trial continues to shed light on the operations of FTX and the crypto industry at large.
Ethereum Scaling Solutions Launch Upgrades
Ethereum scaling solutions Scroll and Immutable have made recent announcements. Scroll, a zkEVM layer 2, launched its mainnet after security audits, touting major speed gains over Ethereum. Immutable, developer of an NFT scaling solution, delayed vesting for $67 million worth of tokens to enhance sustainability. Competitors like Polygon and Matter Labs also recently released zkEVMs.
Crypto Companies Navigate Regulatory Challenges
Crypto companies are navigating regulatory challenges as they expand their operations. Binance, Coinbase, and Ripple have cited the "major questions doctrine" in their legal battles with the SEC, arguing that the agency lacks the authority to regulate them. Meanwhile, U.S. Federal Reserve Governor Michelle Bowman has expressed concerns about the potential risks and tradeoffs of a U.S. central bank digital currency (CBDC). In other news, gaming platform Roblox has debunked claims that it will support XRP payments, stating that it does not enable cryptocurrencies as a payment method.
LSDFi Sector Growth on Ethereum
The liquid staked Ether derivatives sector has grown nearly 60x in 2023 as investors seek yield ahead of the Ethereum merge. Over 40% of staked Ether is now in LSD protocols like Lido. The growth enables smaller holders to access staking benefits and liquidity. However, yields are declining as more Ether is staked.
dYdX Decentralizes with Move to Public Benefit Corp
Leading DEX dYdX will not earn fees from its upcoming v4 platform after becoming a public benefit corporation. The move aligns the project with decentralization goals. dYdX remains profitable from prior versions but expects volume to eventually shift to v4.
Bitcoin Dominance Increases, Ether Lagging Bitcoin Amid Market Indicators
Bitcoin has outperformed altcoins, with its dominance reaching a 17-month high. Ethereum dropped to a 15-month low against Bitcoin. The upcoming Bitcoin halving and anticipation of SEC approval for a spot BTC ETF may extend Bitcoin's lead over the rest of the crypto market. Ether may continue to underperform Bitcoin as yields on 10-year and 3-month Treasuries move toward inversion, signaling a potential recession. Ether correlates more strongly with the yield curve than Bitcoin, which could get a boost from optimism around a spot ETF.
Bahamian Ties to FTX Revealed
Evidence from Sam Bankman-Fried's trial shows the Bahamian Prime Minister asked SBF for NFT advice for his son, highlighting close government ties before FTX's collapse. The Bahamas has since looked to increase oversight of crypto firms, though the PM remains supportive of the industry.
Bored Ape Yacht Club Creator Restructures
Yuga Labs, the company behind the Bored Ape Yacht Club (BAYC) NFT project, has completed its restructuring and will now focus on building a gamified and interoperable metaverse called Otherside. The CEO emphasized the challenges of creating an immersive metaverse and stated that the company's top priority during the restructuring was to treat departing employees with respect and gratitude.
Fantom Foundation Hacked
Unknown hackers drained around $657,000 worth of tokens from Fantom Foundation's wallets on both Ethereum and Fantom's network. The stolen funds were moved to a wallet holding $7 million in Ether. Fantom's token price dropped almost 5% after the incident.
Institutional Crypto Interest
BlackRock CEO Larry Fink said clients globally are asking about crypto, calling the recent rally a "flight to quality." Grayscale's Bitcoin Trust discount has also narrowed close to its lowest point since 2021, suggesting institutional interest. Major banks aim to offer crypto services amid rising client demand.