Crypto Ecosystem

Could Bitcoin register a sixth green month in a row?

, February 1, 2024

In this week’s crypto highlights, we explore the price movements of BTC, SOL, XRP, and DYDX. Additionally, this recap includes other notable industry news items that occurred over the last seven days. Without further ado, let’s dive into the latest market developments.

Market spotlight: Bitcoin bounced off $39,000, amid a new wave of optimism

Bitcoin’s price registered a fifth green month in a row, showing a 0.6% increase in January 2024. At first glance, that percentage may not seem substantial. However, for the first time in over 10 years, Bitcoin experienced a green January, following a September-December rally. 

Bitcoin experienced six consecutive green months only one other time during its reign — between October 2020, and March 2021. Could Bitcoin repeat this run by staying green in February 2024? 

Crypto markets saw a new wave of general optimism, which was predominantly fueled by Bitcoin. BTC price bounced off $39,000, and saw a 1.5% increase of its market dominance. Here are some potential catalysts behind the move:

  • GBTC outflows — They dropped by 70% since the peak, and have been showing consecutive decreases almost every trading day. Inflows into all other U.S. spot Bitcoin ETFs began outweighing GBTC outflows. This sparked speculation that increased selling pressure, which was arguably inspired by Grayscale’s product, might be approaching its end.
  • Google ads — Starting January 29, Google allowed the promotion of “cryptocurrency coin trusts” that target U.S. customers. As anticipated, numerous asset managers, including BlackRock and VanEck, began advertising their Bitcoin ETFs. Many speculated that this could boost public awareness about U.S. spot Bitcoin ETFs, and potentially affect inflows to these products.
  • USDT flux — According to CryptoQuant, there is a correlation between USDT circulating supply and Bitcoin’s price. When the USDT supply increases, this typically, positively affects Bitcoin price. Over the last 30 days, the USDT supply increased by over $5 billion.

Despite these positive developments, bears might continue to dominate the market in the short term. After bouncing off the 0.382 Fibonacci point, Bitcoin’s price failed to sustain above $43,300. The recent price movement resembles an ABC correction pattern, suggesting that the 0.5 Fibonacci point could be the next potential target for bears.

The daily RSI is within a downtrend, and is far away from the oversold zone, meaning there could still be space for downward movement. If the asset breaks RSI’s descending resistance line (white line), this could hint at a potential bearish-to-bullish reversal in market momentum.

Noteworthy market events

Bitcoin ETF issuer Bitwise disclosed its wallet address

On January 24, Bitwise announced on its X (formerly Twitter) account that it became “the first U.S. Bitcoin ETF issuer to publish its Bitcoin addresses, empowering anyone to verify BITB holdings and flows.”

The crypto community widely welcomed this move. As a way to support it, many community members sent meme amounts of BTC (6969 and 42069 satoshis), as well as Bitcoin inscriptions, to Bitwise’s wallet. This meant that Bitwise’s ETF temporarily became “overcollateralized.” These donations could be shared with ETF investors, potentially in the form of fee cuts.

While endorsing Bitwise’s dedication to transparency, crypto enthusiasts were also concerned about security. Some were “shocked” by the lack of test transactions, and questioned the asset manager’s use of multisig. Others were worried that Bitwise could theoretically receive “sanctioned Bitcoin,” causing potential troubles for the ETF issuer. 

Solana’s DEX Jupiter temporarily became the largest in terms of trading volume

On January 29, Solana-based decentralized exchange (DEX) Jupiter surpassed the combined trading volume of Uniswap V2 and V3 protocols, reaching $480 million in a day. At the time of this writing, Jupiter holds second place in terms of trading volume, after Uniswap V3.

But how did Jupiter achieve this? Here’s a brief overview of events:

  • Two weeks ago, pseudonymous Jupiter founder Meow announced that an airdrop of the platform’s native token, JUP, would take place on January 31. Before its launch, they also announced an airdrop of a “real memecoin” to test the platform.
  • This memecoin turned out to be a token called WEN, which refers to a popular “Wen, airdrop?” phrase. Any Solana user who had interacted with Jupiter in the past six months, as well as owners of Solana’s Saga phone, were able to claim WEN within a few days. This means around one million wallet addresses were eligible for the airdrop.
  • The WEN airdrop sparked increased trading activity on Jupiter, helping it to reach top rankings. Almost 40% of WEN tokens reportedly remained unclaimed, and were subsequently burned.
  • The JUP token was launched on January 31, as anticipated. Within the initial circulating supply of 1.35 billion tokens, one billion JUP was allocated for airdrops.

As a result, two massive airdrops to a wide audience helped the platform enjoy the hype.

Polygon Labs introduced AggLayer, which is set to launch in February

On January 24, Polygon Labs shared details about its AggLayer solution, which “synthesizes the benefits of both integrated (monolithic) and modular blockchains using zero-knowledge (ZK) technology.”

According to the Polygon Labs team, the solution empowers:

  • Connected L1 and L2 networks to gain access to liquidity, via a single pool.
  • Developers to expand their reach to users through seamless cross-network transactions.
  • End users to explore the crypto ecosystem similarly to the modern Internet — a unified environment that does not require cumbersome bridges.

Polygon Labs plans to launch the AggLayer mainnet in February, during the Aggregation Day event.

Stellar delayed the launch of its Ethereum-style smart contracts

On January 25, the Stellar Development Foundation (SDF) notified the ecosystem of a bug that was discovered in Stellar Core v20.1.0. The bug could theoretically affect applications and services based on new “Soroban” smart contracts. At the time, the SDF said the vulnerability posed “little risk” given the phased rollout plan.

However, after receiving feedback from its developer community, the SDF decided to delay the upgrade launch, according to a blog post. A fix for the bug is anticipated to be available within the next two weeks. The SDF announced that the next vote related to the smart contracts release will take place on February 20, 2024.

One sentence news

  • The U.S. government filed a notice to sell over $130 million in Bitcoin, linked to Silk Road forfeitures. 
  • The first spot Bitcoin ETF application was submitted to Hong Kong’s regulator. 
  • According to Bloomberg’s ETF analyst Eric Balchunas, Charles Schwab could soon launch its own spot Bitcoin ETF.
  • Hong Kong’s SFC labeled Floki and its staking program a suspicious investment product.
  • Abracadabra Finance reportedly experienced an exploit, resulting in the loss of over $6.4 million in crypto assets.
  • Solana introduced Token Extensions, enabling greater customization over token development on the chain.

Notable price performances

SOL price jumped amid increased TVL and user activity

Over the last week, Solana enjoyed increased user activity, amid airdrops of tokens associated with the Jupiter decentralized exchange. Solana’s total value locked (TVL) jumped by over 20% in a week, according to DeFiLlama.

This helped the SOL price move out of the descending channel (white channel), and retest the psychological level of $100. However, bulls failed to sustain the price above said level, hinting that it could be a false breakout. The daily Awesome Oscillator (AO) experienced a zero cross, suggesting that bulls may have an upper hand. However, the daily and weekly RSIs continued showing signs that price correction could stay for a while.

XRP price dropped amid Ripple executive’s hack

On January 31, on-chain analyst ZackXBT reported that Ripple was arguably hacked, resulting in a theft of over 112 million worth of XRP. Shortly thereafter, Ripple co-founder and executive chairman Chris Larsen said that his personal accounts had been hacked, not Ripple’s. He also clarified that the company notified exchanges, asking to freeze stolen funds.

Following this event, the XRP price dropped by over 5% in a day. Other catalysts behind the price drop could be the formation of a bearish rising wedge pattern (white lines), and reportedly increased selling pressure from XRP whales. However, the asset formed a bullish divergence (cyan line) on a four-hour chart, suggesting that a price rebound could soon follow.

DYDX experienced another major token unlock

The dYdX platform recently enjoyed positive developments, temporarily surpassing Uniswap in terms of trading volume, and adding liquid staking on its dYdX Chain. However, the DYDX price continued to experience lower highs, struggling to break the descending resistance line (green line).

On February 1, 2024, over 10% of the DYDX token supply was unlocked. Small token unlocks typically don’t significantly affect asset prices, but large ones (above 1%) are widely considered factors that could drive prices lower. The previous major DYDX unlock happened on December 1, 2023, which arguably fueled the following downward movement. This suggests that the asset could soon try to retest, or even break, the 200-day SMA.

Tune in next week, and every week, for the latest CEX.IO crypto highlights. For more information, head over to the Exchange to check current prices, or stop by CEX.IO University to continue expanding your crypto knowledge.

Disclaimer: For information purposes only. Not investment or financial advice. Seek professional advice. Digital assets involve risk. Do your own research.

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