Weekly Rollup - October 29, 2024

• The People’s Bank of China and Bank of Canada cut interest rates this week.
• US bond and treasury yields spiked, causing stagnation in bitcoin’s recent upside.
• Binance Executive Tigran Gambrayan’s charges were dropped, and detention ended due to health concerns.

Macro Market Updates:

This week, the People’s Bank of China (PBC) cut interest rates again. Following September’s rate cut, the PBC reduced its one-year prime loan rate to 3.1% and reduced its five-year prime loan rate to 3.6%. In his speech, PBC Governor Pan Gongsheng signalled that further rate cuts could be on the horizon. Pan also mentioned the reserve requirement ratio for banks may be lowered by a further 25 to 50 basis points before year’s end.

Around the rest of the world:

• The Bank of Canada made a 50-basis point rate cut, taking its overnight rate to 3.75%.
• The German Manufacturing Purchasing Managers Index (PMI) came in at 42.6.
• Unemployment claims in the US came in lower than forecast at 227,000.

Crypto Market Sectors:

Sector growth was largely contracted this week. The average performance across all sectors was -7.6%. Meme coins and DeFi were the biggest gainers, though not by much, with each growing less than 3% on the week. Not surprisingly, meme coins led the way, presumably driven by a new wave of coins, such as Moo Deng (MOODENG) and Goatseus Maximus (GOAT), which have made significant gains in recent weeks. GOAT grew to a new all-time high of almost US$0.88 on Thursday. The gains were likely driven by Binance’s announcement that it’s launching futures trading for the token. GOAT is now in the top 100 cryptocurrencies, with a market cap of US$569.7 million.

Perpetual decentralised exchanges experienced the biggest contraction this week. The losses could be due to wider consolidation in the crypto market, which has impacted investors’ positions on perpetual contracts. dYdX (ETHDYDX), the decentralised trading and DeFi development network, declined by 18.4% throughout the week. Similarly, WOO (WOO) and Aevo (AEVO) lost 13.6% and 13.7%, respectively.

Bitcoin saw some price fluctuations throughout the week. Starting around $69,045, it briefly pulled back, testing key support at $65,500, before making a strong rebound to approach the $70,000 mark. This weekly gain of about 4% highlights Bitcoin's resilience despite rising U.S. Treasury yields, which reached a 3-month high of 4.3% for the 10-year note and 4% for the 2-year note.

Rising yields typically occur when markets expect interest rates to remain higher for longer. The US Federal Reserve’s 50-basis point cut in September, subsequent commentary from the central bank, plus yields acting as a proxy for future interest rates, indicate that a 25-basis point cut may be delivered on 8 November, but markets shouldn’t expect any larger cuts by the Fed before year’s end.

In the short term, rising yields could cause bitcoin’s price to stagnate. However, if high treasury yields and growing government debt continue, and markets expect they will, it can drive upward momentum in risk-off assets, such as gold and bitcoin.

Bitcoin asset investment products saw inflows of US$920 million this week, presumably due to the factors outlined above. This takes inflows for the year to date to US$25.5 billion.

Microsoft is considering whether it will start investing in bitcoin. At its annual shareholders meeting scheduled for 9 December, there will be a vote on the “Assessment of investing in bitcoin”. The board is advising shareholders against it, and the Securities and Exchange Commission (SEC) filing doesn’t detail what investing in bitcoin would look like for the tech giant.

Also this week, Bitcoin’s mining difficulty hit an all-time high of 95.67 terahashes on Tuesday. In the year to date, Bitcoin’s mining difficulty has increased by 27%.

Ethereum’s performance was less impressive than Bitcoin's, continuing its underperformance. Opening the week near $2,756, Ethereum slipped to a low of $2,379 on Friday before stabilising, now trading around $2,562 - a decline of 4.2% over the week. The range between $2,800 and $2,715 continues to act as a significant resistance zone, which ETH has struggled to break above in recent months.

Aside from wider market stagnation due to macroeconomic factors, Ethereum co-founder Vitalik Buterin took to Twitter (aka X) this week to defend against criticism about the network’s routine sale of ETH. Buterin explained that the sales need to occur to fund payments to developers and researchers who maintain Ethereum’s Proof-of-Stake protocol. He also outlined that eliminating the need for every node to permanently store the network’s history could form part of efforts to simplify the network in its upcoming upgrade, “The Purge”.

It was another week of outflows for Ethereum asset investment products, with funds losing US$35 million. The outflows are presumably due to an ongoing lack of momentum in Ethereum ETFs and wider concerns about the network.

Money grows on chains

• Raydium (RAY) gained 38.8%, taking its market cap to US$895.5 million. Price for the automated market maker presumably grew due to recent “burn and earn” updates brought to the network, plus major milestones, such as surpassing US$300 billion in lifetime volume. This week’s gains follow recent weeks of upward momentum. Since October 10, RAY has gained over 100%.
• Orca (ORCA) grew by 32%. Its market cap now sits at US$157.2 million. Price recently found support at the 50-day moving average around US$2.13 and has since gained almost 40%. The recent gains are presumably due to the announcement that Orca will be launching on the Elicpse mainnet by the end of the month.
• Maple (MPL) gained 24.6%, which takes its market cap to US$178.2 million. The digital lending network saw total value locked (TVL) surpass US$500 million this week, which presumably drove the gains. Its Syrup network, which offers yield to institutional investors, saw its TVL grow to over US$200 million this week.

You’re safe here

• Safe (SAFE) gained 34.4%, which takes its market cap to US$630.3 million. The smart account network on the Ethereum Virtual Machine (EVM) announced this week that its Safe wallet now allows multichain transactions, with over 15 networks available and no gas fees on major layer 2 networks. Price gained almost 100% on the announcement and has since retraced.

Digital asset investment products saw inflows of US$901 million this week. This takes year-to-date inflows to US$27 billion, three times larger than the record of US$10.5 billion set in 2021. Inflows for the month of October now represent 12% of assets under management and the fourth largest month for flows into these products. Most of the inflows went into bitcoin asset investment products, and this is presumably due to the macro factors outlined above, plus the Republican Party’s polling gains.

• Stripe has acquired stablecoin payment platform Bridge for US$1.1 billion, indicating the growing adoption of stablecoin payments within the mainstream financial system. Bridge is a software platform that allows businesses to integrate stablecoin payments into their existing payment infrastructure without the need to manage a blockchain. The acquisition follows moves from other payments companies, such as PayPal, that have introduced stablecoin payments to their platforms. By offering stablecoin transactions, users enjoy faster and cheaper cross-border payments, USD-based savings, and access to DeFi applications.
• The Manhattan US Attorney’s office and the US Treasury Department are investigating stablecoin issuer Tether, according to a report by the Wall Street Journal. The alleged criminal investigation is looking to determine if USDT is being used to facilitate illegal activities, such as terrorism, drug trading, and hacking. The US Treasury Department is investigating whether tether is being used by US-sanctioned people and groups. Tether’s CEO, Paolo Ardoino, posted on Twitter (aka X) that the company had not received a notice that it was under investigation.
• Uniswap’s permissionless bridging has gone live across nine networks. The development aims to help users navigate the cumbersome process of operating and managing assets across multiple chains with more ease. Bridging on Uniswap is possible on the Ethereum, Base, Arbitrum, Polygon, Mainnet, Zora, Blast, World Chain, and ZKsync networks. The network’s permissionless bridging is being powered by Across Protocol, which operates as a decentralised network of liquidity pools and relayers.

• Binance Executive Tigran Gambrayan has had his charges dropped and has been released from a Nigerian prison due to poor health. Gambrayan has been in detention in Nigeria since February, when he visited the country to negotiate with authorities over the ban of numerous crypto trading sites in the country. He had to hand over his passport and was taken into custody during these negotiations. Throughout his detention, he suffered a range of health issues that weren’t properly treated.
• The Dutch Government is seeking feedback on a new crypto bill. The bill would enact the European DAC8 Directive in the Netherlands. If passed, crypto service providers would have to exchange customer data with the tax authority so it aligns with legislation across the EU. The European DAC8 Directive comes into effect on 1 January 2026. The Dutch Government’s bill will also make customer data accessible to tax authorities in non-EU countries as part of the OECD Crypto-Asset Reporting Framework (CARF). The feedback period for the bill ends on 21 November 2024.