DOGE's unexpected move

 

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Crypto markets in turmoil: Bitcoin, Solana, XRP, plunge in unexpected downturn

Key points:

  • The decline in Bitcoin's value was sudden, catching many investors off guard as they anticipated a positive trend for the digital currency.

  • The market turbulence not only affected Bitcoin but also led to significant losses for other major cryptocurrencies like Solana, XRP, and Ethereum.

News - The anticipated surge of Bitcoin in 2024 is taking a backseat. The cryptocurrency witnessed a major fall recently which left many investors shocked.

Unexpected market shift - Starting January 3rd, BTC was valued above $44,000, with numerous forecasts projecting a potential rise to $50,000 by month's end. As of press time, the digital asset hovered slightly over $43,000 facing a market downturn.

Notably, Bitcoin wasn't the sole digital currency affected. Solana experienced a 7% drop within the last day, whereas XRP saw a sharp decline of 12%. Ethereum followed suit with a 5.30% decrease.

Why did the market face sudden sell pressure?

  • Investors got concerned about Bitcoin ETFs. Recent information from Matrixport (a financial service platform), just before the downturn, suggests that the U.S. SEC might defer the approval of any Bitcoin ETFs slated for this month. The delay stirred unease among investors. Well, Alex Kruger, an economist and trader, had previously indicated an impending market correction.

  • The downturn saw a spike in Bitcoin's trading volume, exceeding $40 billion, indicating substantial sell-offs. This heightened activity led to numerous liquidations, predominantly affecting long-term traders. 

  • Data from Coinglass indicated liquidations surpassing $500 million, with Bitcoin accounting for $72.13 million of this loss.

South Korea considers banning credit card payments for cryptocurrencies

Key points:

  • South Korea's Financial Services Commission proposed to ban locals from buying cryptocurrency with credit cards due to concerns about illegal outflows and money laundering.

  • The regulations, as of press time, applied verification to local crypto exchanges but not to foreign ones.

News - South Korea's primary financial overseer, the FSC (Financial Services Commission), has been advocating for alterations to credit finance rules, aiming to prevent its citizens from using credit cards to procure cryptocurrencies. 

The move, announced on 3 January, stemmed from concerns regarding potential illicit fund transfers and the risk of money laundering tied to local individuals purchasing digital assets from global exchanges. 

FSC's financial integrity concerns - The FSC emphasized the dangers associated with card-based transactions on foreign crypto platforms, highlighting their role in fostering speculative behaviors and facilitating financial crimes. 

The proposed changes categorize virtual assets as unsuitable for credit-based payments. At press time, South Korean crypto exchanges mandated identity verification for transactions within digital currencies, a safeguard not uniformly applied to international crypto venues. 

Seeking public insights, the FSC will accept feedback until 13 February, with plans to finalize the regulatory adjustments by the initial half of 2024.

Goldman Sachs explores Bitcoin ETF role through BlackRock and Grayscale

Key points:

  • Goldman Sachs appears poised to assume a significant role in the introduction of Bitcoin ETFs sought after by BlackRock and Grayscale in the United States.

  • BlackRock holds the title of the world's largest asset manager, while Grayscale manages the largest Bitcoin investment vehicle, the $26 billion Grayscale Bitcoin Trust.

News - Goldman Sachs, a renowned Wall Street firm, is reportedly in discussions to serve as an authorized participant (AP) for upcoming U.S.-based Bitcoin ETFs backed by BlackRock and Grayscale. Serving as an AP plays a crucial function within the expansive ETF sector, responsible for facilitating the creation and redemption of ETF shares to replicate the performance of their underlying assets.

AP Roles in Bitcoin ETFs - Goldman Sachs would align with other financial powerhouses, including JPMorgan Chase, Jane Street, and Cantor Fitzgerald, which have recently announced their AP roles for several companies pursuing SEC approval for Bitcoin ETFs. Industry insiders anticipate that each Bitcoin ETF will engage five to ten APs.

The shift towards cash-based mechanisms for managing Bitcoin reserves supporting these ETFs has encouraged major U.S. banks, traditionally hesitant about direct cryptocurrency involvement, to participate. Notably, BlackRock stands as the world's largest asset manager, while Grayscale manages the substantial $26 billion Grayscale Bitcoin Trust, aiming to transition it from a trust structure to a more accessible ETF format.

Polygon zkEVM aims to beat its 2023 success in the year 2024

Key points:

  • MATIC, Polygon's native token, displayed resilience in market activity, with trading volume increasing despite a 2% price drop.

  • zkEVM's 2024 trajectory appears promising, with consistent growth in daily transactions and active addresses, though it lags behind zkSync in some metrics.

News - In December 2023, Polygon's zkEVM saw a significant increase in network activity, suggesting growing user adoption. At the start of 2024, it seemed worth considering if this surge would continue. 

Recent data showed a 200% jump in zkEVM's daily active addresses for December. Additionally, its daily transactions increased by more than 130% throughout the month. 

zkEVM's 2024 prospects - Initial data indicated a promising outlook for zkEVM in 2024. Even though there was a notable drop in total value locked (TVL) following a peak at the end of December, metrics such as daily active addresses and transactions remained encouraging.

When comparing zkEVM to its primary competitor, zkSync, the results were varied. While zkEVM experienced growth, particularly in revenue, it fell short of zkSync in terms of active addresses and transactions.

What about MATIC’s price? Polygon's native token, experienced bearish trends, dropping by more than 2% over the last 24 hours as per CoinMarketCap. Despite this decrease, its trading volume went up, indicating sustained market activity. At press time, MATIC was priced at $0.9859, with a market cap of more than $9.4 billion.

Crypto scams uncovered

  • The Decentralized Autonomous Organization was a crowdfunded project on the Ethereum blockchain. In June 2016, a vulnerability in its code was exploited, leading to the theft of approximately 3.6 million Ether, valued at around $50 million at the time. The incident resulted in a contentious hard fork of the Ethereum blockchain, leading to the creation of Ethereum Classic.

  • In December 2017, NiceHash, a cryptocurrency mining marketplace, reported a security breach where hackers stole approximately 4,700 Bitcoin, worth roughly $64 million at the time. The platform pledged to work with authorities and conducted a thorough investigation into the incident.

  • South Korean exchange Coinrail experienced a hack in June 2018, resulting in the theft of various cryptocurrencies, including $40 million worth of tokens. The incident highlighted concerns about the security measures of smaller cryptocurrency exchanges.

Top 3 coins of the day

Solana (SOL)

  • Solana's SOL token, which crashed in price from over $200 in 2021 to under $10 in 2022, has moved back above $100 in recent months

  • During the previous cycle, the Solana blockchain faced criticism for its strong connections to Sam Bankman-Fried and its inconsistent history of network outages.

What you should know - On a macro-frame, Solana has been on an upward trend. However, on a lower timeframe, the coin was seen facing sell pressure. Analysts predict, that if the investors exit the market, the coin could go down to its near-term support zone below $80. However, the good news surfaced, at press time, SOL was leading with bulls facing a strong trading volume. It noted a 2.69% increase over the last 7 days. The leading technical indicator RSI has moved on a downtrend after 25 December. And at the time of writing, it signaled a bearish reading.

Dogecoin (DOGE)

  • Dogecoin may no longer be getting the buzz it used to during its Elon Musk era, but it’s still one of the most popular cryptocurrencies.

  • At press time, it was holding the 10th largest market cap in the world and its price has been rising steadily since early November.

What you should know - DOGE saw a dramatic decline on 3 January when its price decreased from $0.0913 to $0.0763. The selling pressure was predominant in the market and the investors were mostly in fear. Interestingly, from August to October, it traded sideways only to breakout at the $0.0674 level. In the coming days, buying pressure can be expected to halt at the $0.1076 level. Traders need to be cautious as RSI, at the time of writing, stood at the 40-mark, thus highlighting exhaustion in the market.

  • Chainlink's involvement in tokenizing Real World Assets(RWA) significantly contributed to the growth of the RWAs category.

  • Its social dominance spiking to 0.906% signified heightened market attention and recognition, reflecting the project's growing significance and influence within the cryptocurrency community.

What you should know - In addition to RWA, Chainlink also collaborated with platforms such as AVAX (Avalanche) and ICP (Internet Computer), which pushed its market cap to $33.22 billion by year-end. Analysts, such as Michaël van de Poppe, anticipated LINK's price to potentially double to $25 soon, noting its strong correlation coefficient of 0.94 with Bitcoin, indicating aligned price movements despite LINK's higher volatility. At press time, the price stood at $14.41, marking a decline of 7.26% over the past 24 hours. Compared to its price of $15.07 just a week ago, there has been a notable drop of 17.60%. 

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