Weekly Crypto Market Wrap, 18th December 2023

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Zerocap provides digital asset liquidity and digital asset custodial services to forward-thinking investors and institutions globally. For frictionless access to digital assets with industry-leading security, contact our team at [email protected] or visit our website www.zerocap.com

Holiday Break

This (brief) Weekly Crypto Market Wrap is our last of 2023 – and an abridged version, as most of the team takes a well-deserved break. We are grateful for your support and are looking forward to an amazing 2024. The next Market Wrap will be out on 8th January. Happy Holidays and a Happy New Year!

Week in Review

• We have launched the Bitcoin Discount Note, our latest structured product enabling investors to take a long position in Bitcoin at a lower price than the market value under specific expiry conditions – ideal for those with a stable to moderately bullish outlook on Bitcoin. *Wholesale investors only.
• Global blockchain gaming market expected to reach $600 billion by 2030.
• US SEC denies Coinbase push for crypto regulations as “unwarranted˜.
• Chinese government plans to use blockchain for identity verification.
• US’ national vulnerability database adds Bitcoin inscriptions to its records. 
• KuCoin agrees NY users ban and $22 million settlement in novel NYSC case.
• Sales of Solana phone SAGA surge as buyers seek BONK token airdrop.
• FOMC: Federal Reserve keeps rates steady, but open to discussion on rate cuts soon, Chair Powell points to “signs of economy normalising” – US inflation slows to 3.1% annual rate in November. 
• European Central Bank keeps rates on hold, lowers inflation forecast.
• UK’s m/m GDP shows economy shrinking once again in October – rates held at 5.25% following policy summary release, inflation at 2% remains the target.

Market Highlights

• The crypto market closed the week with BTC and ETH down by 5.60% and 6.5% as US equities hit all-time highs last week, alongside a dovish Fed. We are heading into the lower liquidity Christmas period, and expect gaps within the range as everyone takes a well-deserved break. 

Data Source: TradingView

• A continued upward trend in equities may benefit the crypto market, particularly if we see more than one spot Bitcoin ETF announced in January. The upcoming halving should begin to play into the narrative as we get into Q1, 2024.
• Right now, however, rolling spot correlations are off between equities and cryptocurrency.

Data Source: TradingView

Protocols and Alts

• DeFi witnessed a notable week with unfolding events on Dec. 14. As a malicious actor exploited a vulnerability in the Ledger hardware wallet’s connector library, the exploit posed a significant risk to the entire decentralised application (DApp) ecosystem. On-chain analysts and prominent DApps like SushiSwap and MetaMask urged users to refrain from wallet interactions. Ledger responded promptly, releasing a patch within hours to address and contain the vulnerability.
• This brings up the issue once again of asset security in the DeFi space. Keep an eye out for increased innovations across MPC custodians as they tend to outpace the native cold hardware wallet solutions in terms of connective security.

• DeFi witnessed a notable week with unfolding events on Dec. 14. As a malicious actor exploited a vulnerability in the Ledger hardware wallet’s connector library, the exploit posed a significant risk to the entire decentralised application (DApp) ecosystem. On-chain analysts and prominent DApps like SushiSwap and MetaMask urged users to refrain from wallet interactions. Ledger responded promptly, releasing a patch within hours to address and contain the vulnerability.
• This brings up the issue once again of asset security in the DeFi space. Keep an eye out for increased innovations across MPC custodians as they tend to outpace the native cold hardware wallet solutions in terms of connective security.

Have a fantastic and safe break into the New Year, and hope 2024 brings rich life experiences and green candles!

Jon de Wet, CIO

What to Watch 

• Australian monetary policy minutes, on Monday.
• Bank of Japan conference and monetary policy statement, on Tuesday.
• UK’s CPI and US’ consumer confidence report, on Wednesday.
• US’ final quarter GDP and unemployment claims, on Thursday.
• Canada’s m/m GDP report, on Friday.

Insights 

• The Bitcoin Discount Note – Defined Outcome Investing: 

Implement a structured approach to investing in Bitcoin, combining potentially high returns with strategic entry points. Tailored for those with a stable to moderately bullish outlook on Bitcoin, The Bitcoin Discount Note is ideal for sophisticated portfolios seeking asset exposure with a defined risk-reward structure.

The Note provides you with one of two possible outcomes:

1) If BTC is above $50,400 on 28 June 2024, investors earn a 33% return in USD.

2) If BTC is below $50,400, investors have the option to buy BTC at a 10% discount from its current price.

Learn more in the article above.

* Index used:

Bitcoin	Ethereum	Gold	Equities	High Yield Corporate Bonds	Commodities	Treasury Yields
BTC	ETH	PAXG	S&P 500, ASX 200, VT	HYG	SPGSCI	U.S. 10Y

FAQs

1. What is the Bitcoin Discount Note and How Does it Benefit Investors? The Bitcoin Discount Note is Zerocap’s latest structured product designed for investors looking to take a long position in Bitcoin at a price below market value under specific conditions. This product is ideal for those with a stable to moderately bullish outlook on Bitcoin, offering a strategic approach with a defined risk-reward structure. Investors can either earn a 33% return in USD if BTC is above $50,400 by 28 June 2024 or have the option to buy BTC at a 10% discount if it’s below this threshold​​.
2. How Did Global Market Conditions Impact Bitcoin and Ethereum Recently? The crypto market witnessed a downturn with Bitcoin (BTC) and Ethereum (ETH) falling by 5.60% and 6.5%, respectively. This occurred in a period where U.S. equities reached all-time highs and the Federal Reserve maintained a dovish stance. The market is entering a lower liquidity period due to the Christmas break, which might lead to fluctuations within the trading range​​.
3. What are the Recent Developments in DeFi Security and Asset Protection? The Decentralized Finance (DeFi) sector recently faced security challenges when a vulnerability in the Ledger hardware wallet’s connector library was exploited, posing risks to the DApp ecosystem. This event highlights the ongoing issues of asset security in DeFi and underscores the importance of innovative solutions in connective security, such as Multi-Party Computation (MPC) custodians​​.
4. What Key Global Economic Events Should Crypto Investors Watch? Crypto investors should keep an eye on several key global economic events, including the Australian monetary policy minutes, Bank of Japan’s conference and monetary policy statement, the UK’s Consumer Price Index (CPI) and the U.S. consumer confidence report, the U.S. final quarter GDP and unemployment claims, and Canada’s month-on-month GDP report​​.
5. How is the Global Blockchain Gaming Market Projected to Grow? The global blockchain gaming market is expected to see significant growth, with projections estimating its value to reach $600 billion by 2030. This indicates a growing interest and investment in blockchain technology within the gaming industry, marking a substantial area of development within the blockchain sector​​.

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