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Crypto Markets Pump; Morgan Stanley Says Crypto Winter Over; Are We Back? 👀
Crypto markets have been on fire as of late. Leading some to call the end of the Crypto Winter but we’ll leave that call to the prognosticators. Let’s just take a moment to exhale and enjoy this strong move to the upside in the face of increased global uncertainty. There are still plenty of things (inflation, interest rates, geopolitical conflicts) to be mindful of when considering where we go from here but the builders continue to build — and that is what’s most important.
At Velvet Capital, we just launched our next-gen DeFi operating system where anyone can create, launch, and manage on-chain funds, portfolios, and other structured products. With over 60 institutional clients signed up for our soft launch, the demand has been crazy! The feedback has been even better. To reward our weekly readers, we are going to drop the link here — shush don’t tell anyone!
Quick Hitting Alpha
· Binance will cease its Visa debit card services in the European Economic Area (EEA) starting December 20, following regulatory scrutiny and the withdrawal of card partnerships by Mastercard and Visa.
· California Governor Gavin Newsom has enacted a law limiting daily transactions via crypto ATMs to $1,000 per person, effective January 2024.
· PetroChina recently utilized China’s digital currency, e-CNY, for an international crude oil purchase of 1 million barrels — a first in e-CNY’s history.
· The SEC has filed a motion to dismiss its lawsuit against Ripple’s CEO and co-founder. They plan to discuss appropriate remedies for the crypto firm’s violations concerning institutional XRP sales.
· NY Attorney General Letitia James has sued Gemini, Genesis, and Digital Currency Group for allegedly defrauding users of $1B and seeks to permanently ban them from New York.
· Due to low revenues and uncertainties about Polygon’s 2.0 upgrade, the Lido community is considering leaving Polygon, on the same day they decided to exit Solana, which cost them $0.5M.
· Marathon Digital, a crypto mining company, has teamed up with Fidelity Digital Assets for crypto storage, adding a second custodian to diversify its third-party custodians.
· Coinbase has chosen Ireland as its European hub to strengthen its European presence, citing the country’s supportive fintech environment and reputable regulations.
· US Senator Elizabeth Warren, backed by over 100 lawmakers, is urging top security officials to tackle terrorist financing via cryptocurrencies, following reports of Hamas raising millions through Bitcoin donations.
· Uniswap Labs’ introduction of a 0.15% swap fee on certain tokens for ongoing development has sparked criticism, especially as it bypasses a protocol fee beneficial to UNI token holders.
In The News
Digital asset management firm 21.co predicts that the market for tokenized assets could grow to $10 trillion by 2030, driven by the adoption of blockchain technology by traditional financial institutions. The firm notes the ongoing convergence between crypto and traditional asset classes, such as fiat currencies, equities, government bonds, and real estate. Tokenized real-world assets (RWAs), including private equity, debt, and real estate, could transform existing financial infrastructure, increase efficiencies, reduce costs, and optimize supply chains. Currently valued at about $116 billion, the tokenized asset market is dominated by Ethereum, Tron, and Solana. Digital dollars, or dollar stablecoins, account for 97% of all tokenized assets, while other types, including US government bonds, have seen over 450% growth this year.
Morgan Stanley Wealth Management suggests that the recent crypto bear market, often referred to as the ‘crypto winter,’ may be over. This suggestion is based on data showing that Bitcoin (BTC) typically bottoms out 12 to 14 months after peaking, and a price increase of 50% from this low usually indicates the end of the downturn. BTC has risen 70% year-to-date and 77% from last year’s lows, which is seen as a positive sign. The firm also highlighted the importance of the ‘halving’ event, where the reward for mining a bitcoin block is halved, reducing inflationary pressure, and potentially sparking a bull run. Since Bitcoin’s inception, there have been three such runs, each lasting 12 to 18 months after the halving.
Sam Bankman-Fried’s attorneys have requested that the FTX founder be allowed access to his prescribed ADHD medication, Adderall, during his ongoing fraud trial, as he is struggling to focus without it. Since the trial began two weeks ago, Bankman-Fried has only been permitted to take the drug in the early morning before court. The defense team expressed concern that their client’s inability to access his medication could impact key decisions, such as whether he will testify. They have tried to resolve the issue with prison officials but received no response. The filing also revealed that Bankman-Fried has struggled to maintain his strict vegan diet while in custody. The trial for charges of conspiracy and wire fraud is heading into its third week, and Bankman-Fried faces up to 115 years in prison if convicted.
Lightning Labs has launched the mainnet alpha of its Taproot Assets protocol, a significant development that enables the issuance, management, and transfer of stablecoins and other assets on the Bitcoin blockchain. The release provides forward compatibility, ensuring future protocol changes do not impact Taproot assets. Lightning Labs believes this innovation could lead to a variety of global currencies being issued as Taproot Assets and settled instantly over the Lightning Network. Notably, the integration of Lightning support will allow these transactions to route through Bitcoin’s existing liquidity. This launch comes in response to the rising demand for stablecoins, especially in regions with high inflation. Taproot Assets aims to meet this demand by bridging the gap between Bitcoin and stablecoins.
As Ethereum turns eight, the future of cryptocurrency remains filled with unanswered questions. Key issues include whether there will be a single dominant blockchain or multiple ‘superchains,’ where value is captured in the Rollup Stack, the equilibrium of Longest-Chain-Selection, whether Solana will be overtaken or absorbed by other blockchains, and how onchain price discovery can be achieved. These strategic uncertainties underline the challenges facing cryptocurrency investors, developers, and users, with the answers likely to significantly shape the future of the crypto landscape.
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