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Could the Bitcoin Reserve Act Break the Market as We Know It?
Crypto Alpha Week 51 of 2024 to keep you updated on all things Crypto, Web3 and Blockchain
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TL;DR
Bitcoin Reserve Act: A Game-Changer?
BlackRock Sparks Debate Over Bitcoin's 21M Supply Cap
Synthetix Launched Perpetual Trading on Base
Ethereum Gas Limit Increase Proposal
HAWK Memecoin Lawsuit
FCA Warns UK Citizens About Solana-based Memecoin
Injective Enhances Security with Hypernative
Initia Mainnet Code Frozen, Events and Audits Underway
Avalanche9000 Mainnet Launches with Major Upgrades
Avalanche and Chainlink Dip After FOMC Announcement
Bitcoin Drops to $100K Amid Fed’s Hawkish Stance
Binance Australia Sued Over Consumer Protection Violations
And much more!
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Bitcoin Highlights of the Week
The proposed Bitcoin Reserve Act could revolutionize crypto markets by enabling the U.S. government to accumulate Bitcoin as a reserve asset, potentially disrupting the traditional four-year halving cycle. Advocates believe this move, alongside global FOMO from other nations, could stabilize Bitcoin’s price and spark a historic supercycle.
A pro-crypto U.S. administration and legislative backing add credibility to the initiative, signaling institutional and geopolitical shifts. Critics, however, caution against betting on a supercycle, citing past disappointments. Whether the Act triggers a new market era or follows historical patterns, its passage could mark a pivotal moment for Bitcoin’s global adoption.
Ohio has introduced the Bitcoin Reserve Act, making it the third state to explore holding Bitcoin as a treasury reserve, after Texas and Pennsylvania. Sponsored by Rep. Derek Merrin, the bill allows the State Treasurer to allocate Bitcoin as part of Ohio's asset strategy, highlighting its role as a hedge against inflation.
While the current session may delay its passage, it will be reintroduced in 2025. Advocates, including the Ohio Blockchain Council, praise the initiative for technological leadership. Critics cite Bitcoin’s volatility, but proponents argue cautious allocation can mitigate risks and position Ohio at the forefront of digital finance innovation.
MicroStrategy has purchased 15,350 BTC for $1.5 billion at an average price of $100,386 per coin, raising its total holdings to 439,000 BTC, valued at $45 billion. The acquisition was funded by selling 3.88 million company shares. With $7.65 billion in equity and $21 billion in fixed-income securities, the firm is well-positioned for future purchases.
Its stock, up 490% this year, rose 4.2% following the announcement. As Bitcoin approaches $100K, MicroStrategy strengthens its role in the Bitcoin ecosystem, leveraging its Nasdaq 100 inclusion and aggressive acquisition strategy to maintain a leadership position in the corporate adoption of digital assets.
El Salvador has agreed to make Bitcoin acceptance voluntary and limit government involvement in Bitcoin-related activities as part of a $1.4 billion loan agreement with the IMF. The deal, aimed at reducing the nation's debt-to-GDP ratio, includes measures to phase out the state-backed Chivo wallet and confine public sector Bitcoin engagement.
Despite these adjustments, El Salvador's National Bitcoin Office reaffirmed its commitment to accumulating Bitcoin. This agreement concludes four years of negotiations following El Salvador's adoption of Bitcoin as legal tender in 2021, while surveys indicate limited public usage of the cryptocurrency for transactions.
BlackRock's recent video on Bitcoin reignited the debate on its 21 million supply cap, suggesting there’s “no guarantee” it can’t change. Bitcoin developers argue altering the cap through consensus would result in a new blockchain, no longer aligning with Satoshi Nakamoto's vision. Critics highlight risks to Bitcoin’s value proposition as a scarce asset.
While miners benefit from current incentives, sustainability concerns grow as subsidies halve over time. Historical resistance, like the 2016–17 Blocksize War, demonstrates the community's reluctance to compromise Bitcoin's core principles, emphasizing that changes, while theoretically possible, face significant resistance from stakeholders.
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Ethereum Highlights of the Week
Synthetix has launched multi-collateral perpetuals on Coinbase’s Base, allowing traders to use assets like cbBTC and cbETH as collateral. This update provides improved margin control, hedging opportunities, and exposure to top crypto assets.
Additionally, Synthetix introduced its own perpetuals trading app, transitioning from solely supporting third-party platforms to offering in-house trading solutions. These changes follow a governance overhaul initiated in October, which addressed missed deadlines and included acquiring platforms like Kwenta and TLX.
Ethereum liquid restaking protocols experienced explosive growth in 2024, with total value locked (TVL) surging from $284 million in January to $17.26 billion by December, driven by the increased utility of liquid restaking tokens (LRTs). LRTs enable stakers to secure Ethereum and participate in additional networks, enhancing capital efficiency.
Ether.fi, the leading liquid restaking platform, controls over 50% of this market, thanks to its user-friendly model. Despite its benefits, liquid restaking carries risks like depegging, price volatility, and potential compounded losses from network failures, highlighting the trade-offs of this evolving DeFi innovation.
Ethereum whale wallets now hold a record 57% of the total Ether supply, according to Santiment. This dominance is driven by 104 whale wallets, each containing over 100,000 ETH, collectively valued at approximately $333 billion. Meanwhile, wallets holding between 10 and 100,000 ETH have reached a historic low of 33.5%, signaling potential bullish market conditions.
Analysts predict Ether could surpass its all-time high in the first quarter of 2025, fueled by increasing whale accumulation and growing daily address activity. Ether’s recent price rebound above $4,000 further strengthens the optimistic outlook for the cryptocurrency.
HashKey Group launched the Ethereum layer-2 HashKey Chain mainnet on Dec. 18, following a successful testnet phase. The testnet saw over 860,000 wallet registrations, 24.72 million transactions, and 50 projects deployed. The mainnet, utilizing OP-Stack and Rollup technology, achieved 400 transactions per second (TPS) and low gas fees of 0.1 gwei.
On launch, the network handled 43,300 transactions with a TPS of 0.5 and gas fees around 0.001 gwei. This launch is part of a broader effort to advance blockchain infrastructure in the Asia-Pacific region, coinciding with Hong Kong’s push for crypto-friendly legislation.
As of December 19, 10% of Ethereum validators are signaling support for raising the network's gas limit, a significant increase from just over 1% previously. This follows advocacy for a 36 million gas limit, which Ethereum developers claim could reduce layer-1 transaction fees by 15% to 33%.
The initiative aims to accommodate high-demand applications and improve user experience. However, there are concerns about potential risks to Ethereum's stability and decentralization if gas limits are raised too quickly, which could challenge solo node operators' ability to validate transactions effectively.
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Solana Highlights of the Week
The team behind the HAWK memecoin, associated with Haliey Welch ("Hawk Tuah Girl"), is facing a lawsuit for alleged securities law violations. Filed in New York, the complaint claims the token acted as an unregistered security, causing over $151,000 in financial losses for twelve investors.
The plaintiffs argue that the success of the token was tied to collective efforts, with marketing promising profits. Additionally, it was revealed that $3 million was collected from transaction fees by a wallet controlled by the Tuah Foundation. HAWK, launched on Solana, saw a market cap surge before losing 90% of its value.
The UK Financial Conduct Authority (FCA) issued a warning on Dec. 16 about the Solana-based “Retardio” memecoin, advising citizens to avoid it due to unauthorized financial services and promotions.
The FCA noted that Retardio, which has a market cap of around $87 million, is not authorized to operate in the UK and that consumers dealing with it would not have access to financial protection services like the Financial Ombudsman or the FSCS. Despite the warning, the Retardio project responded humorously, dismissing the FCA’s concerns.
Pudgy Penguins' PENGU token saw a steep decline of over 50% within hours of its Dec. 17 launch, dropping from a market cap of $2.8 billion to under $2 billion. The project distributed about half of its 89 billion token supply to its community, with 26% allocated to NFT holders.
Although the Pudgy Penguins team has not specified a clear use case for PENGU, it is expected to be used for governance. The collection, which includes NFTs like Lil' Pudgys and Pudgy Rods, remains a high-value asset in the NFT space.
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