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Spot Ethereum ETF Anticipation: Industry split between a resounding 'No' and prospective 'Soon'

Key points:

  • The industry seems to be divided on the possible approval of a spot Ethereum ETF.

  • A final decision can be expected between May and August.

News - Anticipation is building within the financial industry as the U.S. Securities and Exchange Commission (SEC) approaches decisions on multiple applications for Ethereum spot exchange-traded funds (ETFs). Notably highlighted by Fox Business's Eleanor Terrett on X (formerly known as Twitter), the industry is in a state of flux with conflicting perspectives.

While some issuers express optimism, drawing parallels with the recent SEC approval of Bitcoin spot ETFs, others encounter internal resistance within the SEC. Terrett's sources suggest a notable sentiment of a "hard no" within the regulatory body, indicating significant pushback against Ethereum (ETH) spot ETF approval.

What is the opinion of asset managers? Asset managers and ETF issuers remain hopeful, citing the SEC's prior approval of Ethereum Futures ETFs and emphasizing BlackRock's successful ETF track record. JPMorgan Chase & Co. and Morgan Creek Capital exhibit a more cautious outlook, estimating a less than 50% chance of approval by May, highlighting the SEC's broader skepticism towards the cryptocurrency sector.

Amidst the debate, SEC Chair Gary Gensler's recent letter added complexity, but Commissioner Hester Peirce, known for her pro-crypto stance, suggests that legal battles may not be necessary for the approval of spot Ether ETFs.

Nexo pursues $3B in damages from Bulgaria following abandoned investigation

Key points:

  • Nexo claims the dropped criminal probe tarnished its image and cost shareholders dearly.

  • Nexo filed legal documents through its Swiss subsidiary Nexo AG with the ICSID on Jan. 18.

News - Cryptocurrency lender Nexo is launching a $3 billion damages claim against the Bulgarian government after prosecutors abruptly dropped criminal investigations last December. The company alleges reputational damage and lost business opportunities due to the ordeal.

How did Nexo file its claim? Nexo filed its claim through the World Bank's International Centre for Settlement of Investment Disputes (ICSID) in Washington D.C., aiming to recoup losses it says stemmed from the abandoned case. In January 2023, Bulgarian authorities raided Nexo's offices and charged four Bulgarian nationals - including company co-founders - with participating in an organized crime group, accusations dismissed due to lack of evidence.

The prosecution's withdrawal hinged on Bulgaria's lack of legal framework for crypto assets. Still, Nexo contends the investigations, however unfounded, significantly hampered its business. In a statement, co-founder Antoni Trenchev pointed to stalled IPO plans with a potential valuation of $8-12 billion and a delayed sponsorship deal with a major European football club.

Though Nexo continues its operations, Trenchev asserted, "opportunities were lost or significantly delayed" due to the legal saga. He vowed to pursue "all legal means" to secure compensation.

XRP falls to a 3-month low mark owing to a decrease in whales' interest

Key points:

  • XRP, at the time of writing, was trading at $0.5152 with a 2.51% upswing over the last day.

  • The coin’s market sentiment was seen to be shifting from greed to neutral.

News - Payments-focused cryptocurrency XRP experienced a significant downturn, plunging to $0.50, marking its lowest point in three months. The sixth-largest digital asset faced a sharp decline, dropping over 5% in 24 hours, as reported by CoinMarketCap. Concurrently, trading volumes surged by 80%, indicating a substantial sell-off by traders.

Ironically, the decline occurred shortly after a popular technical analyst, Ali Martinez, identified a buy signal for XRP on the 3-day chart, suggesting a potential rebound. However, the market's reaction contradicted this outlook.

How was the trading scene? XRP's price depreciation not only raised concerns about short-term profitability but also impacted asset holders. According to AMBCrypto's analysis of Santiment's data, selling at the current price would result in losses of 5.61% for most traders.

While these conditions may deter short-term investors, seasoned traders who maintain confidence in XRP's long-term prospects could view the dip as an opportunity to consolidate their positions.

Interestingly, despite the price crash, whale transactions in XRP spiked. However, there was no significant increase in the number of whale addresses, indicating that whales did not actively accumulate during the downturn.

Japanese lawmakers are looking forward to creating new Web3 policies

Key points:

  • Japan has been actively exploring Web3, the vision of a decentralized internet powered by blockchain technology.

  • Japan's approach to Web3 is both progressive and cautious. Recognizing the potential of decentralization while addressing legal and tax complexities.

News - Japanese lawmakers are paving the way for Web3 in the nation, with two congressmen pushing for clearer regulations and tax adjustments. Masaaki Taira and Hideto Kawasaki, leading figures in the Liberal Democrat Party's Web3 project team (web3PT), outlined their plans in a recent interview.

The web3PT's work started with a whitepaper in April 2023 and culminated in a unique DAO rulemaking hackathon at the end of the year. This open forum, Kawasaki says, brought valuable insights on challenges and priorities for Web3 policy.

What’s more? One key concern raised is the current ambiguity surrounding DAOs (Decentralized Autonomous Organizations) - Whether a company needs to implement a smart contract to qualify as a DAO remains unclear, but Taira believes this will become more defined as the technology evolves. "The next step is to address this clearly in the next white paper," Kawasaki adds, highlighting the need for specific regulations tailored to DAOs.

Beyond DAOs, the web3PT has also achieved progress in the realm of crypto taxation. They successfully steered the party's tax committee towards understanding and passing tax reforms for third-party ownership of digital assets. This reform, included in the party's broader tax reform outline, was approved by the cabinet in December. Kawasaki emphasizes the importance of seeing this reform implemented in practice.

Interesting facts

  • El Salvador in 2021 became the first country to adopt Bitcoin as legal tender, while others like the Marshall Islands are exploring similar moves.

  • Play-to-earn games are emerging, where players can earn cryptocurrency through gameplay and virtual property ownership. Axie Infinity is a prime example, where some players even quit their jobs to play full-time.

  • Many crypto enthusiasts are passionate about giving back. The SENS Research Foundation, for example, uses cryptocurrency donations to fund research into aging and longevity.

Top 3 coins of the day

Cardano (ADA)

  • Cardano experienced a notable spike in its trading volume lately.

  • Over the past four days, ADA has shown a consistent downward trend on the daily timeframe chart.

What you should know - Despite high development activity, ADA was seen trading with the bears at the start of this week. On a careful inspection, one can find that the coin has been mainly changing hands within a range of $0.476-$0.6174 after its breakout on 8 December 2023. At press time, it was trading at $0.4719 with a more than 10% decline over the past week. The leading indicator RSI was seen to be at the 37-mark during press time. Thus, highlighting that the trend reversal might be in soon.

Polygon (MATIC)

  • Development activity on the Polygon network surged over the last week.

  • Despite a fall in MATIC's price, the volume of Polygon NFTs reached new highs.

What you should know - The Polygon network has been buzzing with high network activity. Even though the long-term implications of it look good, the network growth hasn’t been positively influencing MATIC’s price action. At the time of writing, the coin was trading at $0.7296 with 13.38% fall in its 7-D price. There was enough liquidity in the market, as most of the traders, at press time, were seen cutting losses. The reading of the Volume Oscillator indicator suggested that the market could take a breather soon.

Uniswap (UNI)

  • UNI was following the broader market and BTC in particular, at the time of writing.

  • The on-chain metrics of the coin looked in favor of the sellers.

What you should know - Given the broader market downturn, UNI was lacking the force of the buyers. The recurrent red candlesticks on the daily chart painted a grim picture. Even the MACD indicator was rooted down in the bearish territory. Further selling pressure could see UNI go down to the $4 mark in no time. Short-sellers were seen to be in a profitable position, during the time of this report. And the Fear & Greed Index stood in the ‘neutral’ zone.

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