The biggest crypto news and ideas of the day |
Were you forwarded this newsletter? Sign up here. Don't want this newsletter? Unsubscribe |
|
|
MSTR Falls on More Cautious Sentiment |
Traders are no longer chasing upside in Nasdaq-listed MicroStrategy (MSTR), a leveraged play on bitcoin (BTC), signaling a cautious shift in market sentiment. MSTR's 250-day put-call skew, which shows the difference in implied volatility between puts (options to sell) and calls (options to buy), has bounced to zero from -20% in three weeks, according to a data tracking website Market Chameleon. It means that call options, which traders use to achieve asymmetric upside gains from a potential rally in the underlying asset, are now trading at parity with puts that offer downside protection rather than the unusually high premium observed three weeks ago. In other words, the sentiment has flipped to neutral from uber-bullish. The change comes as MSTR's share price has declined by over 44% to $289 since hitting a record high of $589 on Nov. 21, with valuation dropping 34% in the past two weeks alone, according to data source TradingView. "With MicroStrategy shares now down 44% from their peak and other companies adopting bitcoin as a treasury asset strategy at a much smaller scale, the bitcoin tailwind generated by this narrative appears to be losing steam," Markus Thielen, founder of 10x Research, said in a note to clients. MicroStrategy began adding bitcoin to its balance sheet in 2020 and has since accumulated 446,400 BTC ($42.6 billion), often financing the purchases with debt sales. MSTR, therefore, is seen as a leveraged bet on BTC in 2024 and ended 2024 with a 346% gain, outshining BTC's 121% rise by leaps and bounds. However, the end-of-year action was disappointing. While MSTR fell by 25% in December, BTC fell by only 3%, holding relatively steady above $90,000. It's a sign MSTR's appeal as a leveraged bet on BTC is weakening. "The stock’s underperformance, despite substantial bitcoin acquisitions, indicates that investors are no longer willing to pay an implied price of $200,000 (or more) per bitcoin through MicroStrategy when it can be purchased directly at a much lower cost," Thielen noted. |
|
|
Tron's T3 Crime Unit Freezes $100M USDT |
The T3 Financial Crime Unit, a collaboration between the Tron blockchain, stablecoin issuer Tether and blockchain intelligence company TRM Labs, said it has frozen a total of 100 million of Tether's USDT used by illicit actors since the unit was formed in September.
The venture analyzed millions of transactions spanning five continents, monitoring a total volume in excess of 3 billion USDT, the largest stablecoin, T3 said in a statement. T3 involves TRM Labs using its blockchain intelligence and monitoring tools to help Tron and Tether identify and freeze USDT linked to illicit activities. There's nearly $60 billion in USDT issued on the Tron blockchain, the largest issuance behind Ethereum, which has just over $75 billion.
Money laundering as a service — where bad actors hire entities on the dark web to clean illict funds — is the largest source of frozen funds, said Chris Janczewski, head of global investigations at TRM Labs. Investment scams, illicit drugs, terrorism financing, blackmail scams, hacks, exploits and even violent crime have also been targets, he said in an interview with CoinDesk.
"Blockchain is a bad place to do money laundering because it's so transparent. We can confirm victim reports on a public blockchain and even identify other victims, a level of insight that just isn't possible with traditional finance," Janczewski said. As much as 3 million of the frozen USDT had ties to North Korea, which has been active in trying to infiltrate crypto projects in order to fundraise for the country's leadership regime, T3 said. The U.S. Department of Treasury announced in December that it had shut down a North Korea money laundering network.
"Ultimately, we hope that through our efforts, not only will victims recover their funds, but bad actors will think twice before engaging in illicit activity on blockchains like Tron," Janczewski said. |
|
|
KuCoin Enables PoS Payments With QR |
KuCoin has introduced a feature for merchants to allow customers to pay for purchases directly from their account on the crypto exchange.
Merchants can integrate the tool, called KuCoin Pay, into their payment systems. Customers pay by scanning a QR code or using the KuCoin app, the exchange said in a press release. The exchange joins a number of crypto payment providers in facilitating direct payments for customers, a feature that’s supposed to bridge the gap between crypto and the legacy payments infrastructure.
In August, for example, digital payments platform Flexa announced a similar product with retailers including Chipotle, Mikimoto, Regal Cinemas and 99 Ranch Market.
The new infrastructure supports 54 cryptocurrencies, including bitcoin (BTC), ether (ETH) and the USDT and USDC stablecoins.
Several merchants, who expect to launch the feature in January, have signed up for the product, a spokesperson for KuCoin said. Their names cannot be disclosed at this time.
|
USDT Slides Most Since FTX Scandal |
Tether's USDT, the world's leading dollar-pegged stablecoin, has experienced the sharpest weekly decline in market value in two years, spurring market volatility concerns.
USDT's market cap slid more than 1% to $137.24 billion this week, the most significant decline since the crash of the FTX exchange in the second week of November 2022, data from TradingView show. It hit a record $140.72 billion in mid-December. The decline follows a decision by several European Union (EU)-based exchanges and Coinbase (COIN) to remove USDT due to compliance issues with the EU's Markets in Crypto-Assets (MiCA) regulations that took full effect on Dec. 30, even though the rules on stablecoins — cryptocurrencies whose value is pegged to a real-world asset like the dollar — kicked in six months ago.
The regulation requires issuers to have a MiCA license for publicly offering or trading asset-referenced tokens (ARTs) or e-money tokens (EMTs) within the bloc. An ART is a crypto asset that looks to maintain a stable value by referencing another asset like gold, crypto tokens or a combination of both, including one or more official currencies. ERTs reference a single national currency, just as USDT does. EU-based traders can still hold USDT in non-custodial wallets, but can't trade it on MiCA-compliant centralized exchanges.
USDT is a gateway to the crypto market, with investors using it extensively to fund spot cryptocurrency purchases and derivatives trading. As such, the delistings and drop in market value has sparked speculation of a broader crypto market slide on social media.
These concerns, however, may be unfounded and the negative impact, at best, could be restricted to the euro area, Karen Tang, the head of APAC partnerships at Orderly Network, a permissionless Web3 liquidity layer, said in a post on X.
"Access to @Tether_to set to be restricted in the EU due to MiCa regulation isn’t going to harm USDT dominance," Tang wrote. "EU isn’t the largest crypto market. Most crypto trading volume occurs in Asia and U.S. All this will do is stunt the EU’s digital assets innovation, which is already slow due to convoluted overregulation. If I could short the EU, I would…"
Crypto analyst Bitblaze said Asia accounts for the giant share of the tether volume, downplaying the impact of MiCA-led delistings in Europe.
"USDT is the largest stablecoin, with a market cap of $138.5B and a daily trading volume of $44B. As of today, 80% of USDT's trading volume comes from Asia, so the EU delisting won’t have any severe impact," Bitblaze noted on X.
Tether has invested in MiCA-compliant firms StablR and Quantoz Payments in a bid to ensure regulatory alignment. |
The Takeaway: The Year of Acceleration |
By Paul Brody, EY:
On Nov. 6, I wrote a memo to EY’s blockchain leadership team. The headline was simple: “Every single private blockchain just died.” Since November 2022, the crypto and blockchain markets have been defined by caution and gradual recovery. The direction has been consistent and positive, but slow, especially in 2023. In 2024, we saw a gradual but sustained acceleration. The year started with the Bitcoin exchange-traded fund (ETF), and just kept accelerating through an Ethereum ETF, and the adoption of the EU’s Markets in Crypto Assets (MiCA) legislation. We were on a path of steady, global regulatory convergence, including rules of the road for all the major crypto and digital asset types. We were also on a path towards public blockchains. Bitcoin is a kind of digital gold, and Ethereum is a development platform for digital assets and services. The path may have been consistent, but the pace was measured. It was routine to hear people at big financial institutions tell me that they would love to move to public Ethereum but “the regulators won’t allow it.” On the night of Nov 5 (following the U.S. election), the prospect of substantial regulatory change became a reality. Any certainty about what regulators will or will not allow was suddenly out the window and a clear direction of travel was radical acceleration on public networks. There is no absolute certainty in life, but if I must make predictions about 2025, it is that we will indeed have a seachange in the U.S. regulatory environment, and that will, in turn, bring about a collective global shift in the same direction, though not necessarily at quite the same pace. However, since the U.S. is by far the world’s largest financial market, that counts for a lot. Bitcoin is already a big winner here. It is cementing its place as the digital version of gold, and could in the course of 2025, take up that role officially with countries and governments dipping their toes into strategic bitcoin reserves. My own past prediction was that Bitcoin was likely to continue growing until it reaches the size and market cap of gold, which is currently about $14 trillion. In many ways, Bitcoin is much more attractive as a scarcity-based asset. Higher prices for Bitcoin do not increase the supply, something you cannot say about actual gold. Ethereum will be the second big winner. Ethereum has transitioned smoothly to proof-of-stake, dropping carbon output by >99%, and it has also scaled up massively. The combined Ethereum network (Layer 1 mainnet and Layer 2 networks) has several hundred times the capacity it had during the last bull market. Transaction fees are low and likely to stay that way for some time. Massive scalability, low costs, and an outstanding security, and uptime record are going to make Ethereum the choice for most digital asset issuers. Beyond cryptocurrency, the single biggest boom we’re likely to see in 2025 is likely to be around stablecoin payments. The value proposition and business case for stablecoin payments is already strong. Around the world, users want access to U.S. dollars, particularly for international remittances. Use of dollar stablecoins was already popular with crypto users, but access and use cases are spreading rapidly. Circle works with Nubank in Brazil, for example, to make USDC payments directly accessible to all account holders. Celo, an Ethereum network, has partnered with Opera to put stablecoin payments into Opera’s web browser, which is optimized for low-cost smartphones popular in emerging markets. Celo’s stablecoin transaction volumes have been growing rapidly as a result. Stablecoin payments are reaching into the enterprise sector as well. EY, PayPal and Coinbase have worked with SAP to enable fully automated payments from inside enterprise ERP systems. Now, the same in-system automation that works for bank accounts also works for crypto-rails payments. This is particularly important for enterprise use where processes that cannot be automated at scale have no chance of adoption. When combined with improved privacy tools (and better regulatory treatment of privacy systems), crypto rails look like much lower cost options for enterprise users. 2025 is also likely to be a breakthrough year for decentralized finance (DeFi). DeFi relies on software applications running on-chain to replicate key functions in financial services and banking. Throughout 2024, DeFi was the one area of the crypto ecosystem that saw no real movement on regulatory clarity and, thanks to high real-world interest rates, wasn’t a hugely attractive option. The regulatory environment is likely to be much more favorable for DeFi in 2025 and if interest rates come down, a more aggressive search for incremental yield on-chain could take off. DeFi tools that allow people to loan their assets into liquidity pools and other services in exchange for additional return on the asset (and added risk) might become popular again. So the revolution won’t be about something new or different, it will just be about everything rushing forward all at once. And across the board, the competitive intensity in every sector of the blockchain ecosystem is about to get dialed up to 11, (my “Spinal Tap” reference). Companies, banks, brokerages, insurance firms and more that were sitting on the sidelines and watching with horror in 2023 and caution in 2024 and likely to take the plunge in 2025. I’ve already lost track of all the big firms that have announced plans to offer a stable coin, a real world asset, or start selling bitcoin and eth to their customers. Competitive intensity inside the blockchain ecosystem is already dialed up to 11, and 2025 is going to be a rough year inside the market. People running blockchain networks and services should be forgiven for wondering if these are good times, is it worth it? Inside the Ethereum ecosystem, there are now more than 40 different Layer 2 networks. Competition on transaction fees is brutal, differentiation across Layer 2 networks is low, and more competitors are entering the market. Rough as it is inside Ethereum, it may be worse outside as “alt-L1s” face a combined Ethereum ecosystem that looks scalable, secure, and reliably low cost. Some networks, like Celo, already made the pivot from competing with Ethereum to being a part of it. I expect more will follow in 2025. The only worse place to be than facing furious public blockchain competition may be in running a private blockchain. When your value proposition is “it’s as close to Ethereum as the regulators will allow” and all those regulators are being moved out, the prospects are especially bleak. I’ve already fielded calls from firms in private networks asking about how to pivot and how fast it can be done. Lastly, I predict 2025 could be a fabulous year for fraud. A carnival and casino-like atmosphere in online trading combined with rapid regulatory loosening could attract the same grifters that showed up in the last crypto boom. What’s harder to predict is exactly where this fraud may show up. People are generally pretty good at bolting the barn door after the horse has fled. So, things that worked in the past, such as hacking exchanges or borrowing from depositor funds, are going to be harder to repeat. Audits, regulators, and better security technology all contribute to that. That doesn’t mean the risk is going away, just that it will arrive in a new package. Happy New Year and have a great 2025! |
|
|
|
