Highline Wealth Digital Asset Weekly
Crypto never sleeps, so here is the third edition of our Digital Asset Weekly newsletter. This should catch you up on some the more important developments over the last week.
The volatility of all Digital Assets continued this week with Bitcoin hitting a low of $33K on January 24, which is down 52% from it’s all time high on November 10, 2021. Layer 1 protocols Ethereum followed Bitcoin lower falling under $2200, Solana reaching $80 and upstart Terra around the $60 level. Digital Assets may have found a short term bottom on Monday as the Asset class rallied into Wednesday’s Federal Reserve Meeting and continue to hold these levels as of Thursday.
1/23/22 What Happened This Week
- The Federal Reserve meeting took center stage this Wednesday. Fed Funds rates will remain unchanged currently. Chairman Powell mentioned that the Fed would look to increase the Fed Funds rate along the same timeline that it intends to cease asset purchases.
- The Solana blockchain, which has attracted large investment due to its scalability, was under pressure during the most recent crypto selloff. DeFi users who had taken collateralized loans on decentralized exchanges became undercollateralized due to the price drop, and were unable to add collateral due to network congestion. This resulted in a wave of forced liquidations, which fueled further price drops. Developers promised that a fix is in the works, but this is at least the third time the Solana blockchain has slowed to a crawl in recent months.
- President Biden is expected to release a comprehensive cryptocurrency policy in the coming weeks, per a report from Bloomberg, following increased interest from the federal government in digital assets, the Biden administration is reportedly preparing to issue an executive order on cryptocurrency policy.
- Coinbase reported that DeFi growth spikes as crypto shifts to Web3 technologies. The total value locked across layer-1 protocols jumped 1,237% from $18.7 billion at the beginning of 2021 to about $250 billion by year-end, according to DeFiLlama data Uniswap accounted for the lion’s share of volume with $779 billion traded on its protocol.
- CoinTracker, a crypto startup that helps subscribers report and file taxes, has raised $100 million in a Series A funding round.
- The former counsel for Securities and Exchange Commission (SEC) Commissioner Elad Roisman has left to join Coinbase. Her role at Coinbase as a senior public policy manager entails watching the regulatory landscape.
Friday Focus:
We read it so you don’t have to. In our continuing summary of the 165 page Messari “Crypto Theses for 2022”, here are this week’s most interesting points:
The King Stay the King: No Flippenings:
While many have speculated that the second largest crypto, Ether, will displace Bitcoin at the top of the crypto market cap table — the so-called “flippening”, according to Messari — the probability is less than 20% of it happening in 2022.
The Great Fall of China(‘s Bitcoin industry):
China’s bitcoin miners accounted for 70% of worldwide hashrate at the peak, before the CCP’s outright mining ban last year. As mining moved to the US and other countries, it demonstrated the resilience of Bitcoin. “Since 2013, China’s shadow in the bitcoin markets has loomed large. Investors worried what would happen to the network’s security if Chinese mining capacity were turned off. It turns out…basically nothing”.
Lightning Strikes El Salvador:
The Lightning Network, a payment protocol designed to make Bitcoin transactions ubiquitous and cheap, has been in development since 2018 and may have been stalled before El Salvador incorporated it as part of their adoption of Bitcoin as legal tender. This resulted in capacity growth of 181% from January to September 2020, and the “legal currency” status of Bitcoin, even for a small country of six million, is a significant milestone in Crypto’s history.
Credit:
https://blockworks.co/ https://blockworks.co/coinbase-expects-2022-defi-surge
Messari, Crypto Theses for 2022
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