Market Insights: DEC 2024 | Week1
Wavebridge Research/
Decline in Bitcoin Dominance and Strengthening of the Global Cryptocurrency Market
Bitcoin's dominance dipped below 56% as the crypto market continued to strengthen across the board. This was the first time it broke below the support level in two years, and the crypto futures market saw a shift in market sentiment, with ETH's open interest overtaking BTC's open interest in futures. Several countries have begun discussions to incorporate Bitcoin into their national reserves. With El Salvador leading the way by adopting Bitcoin as a legal tender, several other countries, including the United States, Brazil, Poland, and Russia, are actively exploring the idea of stockpiling Bitcoin. Most notably, the Brazilian Congress recently introduced a bill to include Bitcoin in the country's national reserve. The Bitcoin Sovereign Strategic Reserve Act would make 5% of Brazil's international reserve assets in bitcoin. Bitcoin mining companies have a combined market capitalisation of nearly $40 billion. On the other hand, profitability concerns persist, as the difficulty and high cost of mining continues to be a concern.
Record-Breaking Performance in Ethereum and the DeFi Market
The Ethereum spot ETF broke its previous record with $332.9 million in daily inflows, while trading volumes on Ethereum layer 2s like Avitrum and Optimism have surged 430% since March. During the same period, fees collected by the Ethereum mainnet dropped by 87%. In the month of November, the total trading volume across DEXes was $36.41 billion. This is the largest monthly volume ever recorded in the DeFi market, surpassing the previous record of $292.97 billion set in November 2021. It's also an almost 87% surge from the $194.628 billion recorded last month. Stablecoin market capitalisation reached $192.7 billion, a new all-time high. Meanwhile, the list of ISO 20022-compliant coins spread, causing their prices to surge. The list included Ripple, Stellarumen, Algorand, Ada, Hedera, and others. Grayscale Investments resumes private placements in 19 cryptocurrency trusts, including Ripple, Solana, and Stellar.
United States: Federal Bitcoin Reserve and Expanded Cryptocurrency Regulation Discussions
Speculation is growing that US President-elect Trump will create a federal Bitcoin reserve. The Trump administration is considering plans to expand regulatory authority over digital asset markets to the Commodity Futures Trading Commission. A federal appeals court in New Orleans, Louisiana, ruled in favour of Tornado Cash. The New York Department of Financial Services is expected to approve the RLUSD stablecoin issued by Ripple. The US Senate and House of Representatives elections resulted in nearly 300 pro-cryptocurrency members of Congress. Rutnik, the chairman of investment firm Cantor Fitzgerald, has been nominated for commerce secretary. Cantor Fitzgerald is the majority shareholder of Tether, the issuer of USDT, the third-largest cryptocurrency by market capitalisation, and holds the majority of Tether's $134 billion in assets.
Global Regulatory Trends: Cryptocurrency Taxation, Regulation, and Investment
Brazil's central bank proposed regulations to limit stablecoin withdrawals. The Russian president signed a bill recognising cryptocurrencies as property and introducing a new taxation regime. Japan's Financial Services Agency issued an official warning to five overseas cryptocurrency exchanges for unregistered operations. The Hong Kong government issued a $100 million tokenised green bond. The People's Court of Chenhai District, Shenzhen, China, ruled that an agreement to pay wages in cryptocurrency was invalid. Hong Kong is pushing for tax breaks on investment returns in cryptocurrencies to strengthen its position as a crypto hub. Morocco is shifting from prohibition to regulation as it prepares a bill to regulate cryptocurrencies. Maya Parvo, a candidate for the 2025 presidential election in the South American country of Suriname, announced a pledge to make Bitcoin legal tender. Tokenised MMFs surpassed $1 billion in assets under management, according to McKinsey. It is predicted that tokenised assets will reach $16 trillion by 2030.