Nyheter
Bitcoin Breaks $50K mark; Are We Out of the Bear đ» â?
In this report, 21Shares walk you through Bitcoin’s journey toward the $50K mark, Ethereum’s upgrade updates, and how a new experimental token standard has led to a surge in on-chain activity. Last but not least, we’ll give you the key takeaways from Solana’s post-mortem report explaining the cause of its five-hour outage.
Bitcoin Breaks the $50K Mark
Last week Bitcoin saw accumulation levels reminiscent of crypto’s bull run in 2021. However, this time around, the accumulation comes with higher accountability and much less noise, thanks to the abscence of bad actors, such as FTX’s former CEO Sam Bankman-Fried, along with growing institutional appetite. Bitcoin miners have also become reserved sellers, cutting their daily sales by about 62.5% from November and December, according to CryptoQuant, despite the drop in fees. This could mean that Bitcoin miners are positioning themselves ahead of the Bitcoin halving scheduled in 62 days.
As shown in Figure 1, selling pressure on GBTC has diminished over the past week, leading spot Bitcoin exchange-traded funds to step up as the world’s biggest BTC holder with $34.6 billion in assets under management. However, Bitcoin’s path forward is not without challenges. As covered previously, bankrupt FTX and Genesis are anticipated to liquidate their recovered assets to compensate their customers. Aside from the GBTC it sold in January, FTX has $7B in assets ($560M in BTC, as of December 2023) while Genesis is waiting for the court to greenlight its $1.6B in GBTC to liquidate. We may see some selling pressure, potentially impacting medium-term price movements, unless the accumulation of BTC continues.
Figure 1: Spot Bitcoin ETF Flows (YTD)
Source: Bloomberg
Ethereum Nears Final Stage of Dencun Upgrade as New Token Standard Sparks On-Chain Activity Surge
After the third successful rehearsal on testnet on February 7, Ethereum is set to implement the Dencun upgrade on Mainnet on March 17. This upgrade aims to significantly reduce settlement costs for scaling solutions like Arbitrum and Optimism by introducing a new data container, ”Blobs,” which stores data more efficiently while simplifying transaction verification. Anticipated to cut costs for Layer 2 solutions by around 90%, this milestone aligns with Ethereum’s long-term roadmap to enhance transaction throughput and lower gas expenses for users.
That said, the upgrade wasn’t the only source of enthusiasm for Ethereum as a new token standard has surfaced. Dubbed ERC404, the experimental standard integrates attributes from ERC-20 (fungible), like transferability and divisibility for its fractionalized tokens, and ERC-721 (non-fungible) standard for its unique identifier feature to track the underlying NFT. ERC404 has the potential for native fractionalizing of digital assets like collectibles and tokenized real-world assets such as funds and real estate without needing third-party solutions.
However, its use of a minting and burning mechanism has drawn criticism. Buying the tokens involves minting the NFT, while selling them involves selling the NFT to fractionalize the asset’s ownership into smaller transferable units. This process can incur significant costs, unlike a traditional token swap, due to Ethereum’s high fees. This is clear from the rising fees, which have more than doubled on the network in the past two weeks, as depicted in Figure 2 below. Finally, considering ERC404 stands as an unofficial token standard advocated by independent initiatives, lacking endorsement from the foundation—though this could potentially shift in the future—it has not been subjected to comprehensive auditing, thus posing potential vulnerabilities for projects built upon it. Nevertheless, the new trend shows the willingness to continue pushing innovation on top of the largest smart-contract platform, Ethereum, while increasing its revenue.
Figure 2: Ethereum Transaction Fees
Source: The Block
Solana’s Post Mortem
On February 6, Solana experienced a block production halt lasting approximately five hours due to an identified issue termed an ”infinite recompile loop.” The Solana Foundation has since published a post-mortem outlining what went wrong. This bug, previously encountered in a testnet environment nearly 18 months ago, impacted 95% of validators and halted the finalization of transactions. In essence, The glitch was related to how the blockchain remembers and uses certain pieces of code, causing it to get stuck in a loop and stop processing transactions. Solana developers worked quickly to fix the problem by updating the system and restarting it from a safe point.
They solved the immediate issue by making sure the glitch couldn’t happen again, with plans to make more improvements later. Finally, while Solana experienced outages in the past, its historical price performance indicates that its investors are becoming increasingly immune to such technical issues over time, as shown below in Figure 3. The network’s AuM also surged to an 18-month high, increasing by 11% week-over-week since the incident to reach $1.86B, exemplifying the users’ unfazed confidence in the network.
Figure 3: Solana’s historical performance following five of its previous outages
Source: Blockworks
This Week’s Calendar
Source: 21Shares, Forex Factory
Research Newsletter
Each week the 21Shares Research team will publish our data-driven insights into the crypto asset world through this newsletter. Please direct any comments, questions, and words of feedback to research@21shares.com
Disclaimer
The information provided does not constitute a prospectus or other offering material and does not contain or constitute an offer to sell or a solicitation of any offer to buy securities in any jurisdiction. Some of the information published herein may contain forward-looking statements. Readers are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties and that actual results may differ materially from those in the forward-looking statements as a result of various factors. The information contained herein may not be considered as economic, legal, tax or other advice and users are cautioned to base investment decisions or other decisions solely on the content hereof.
• Global crypto asset adoption rates are significantly higher than previously estimated.
• The data generally suggest that both the US and Europe may be at the cusp of mass retail adoption – a situation often referred to as “Hyperbitcoinization” in the context of Bitcoin.
• Chances are that the growth of adoption will surprise to the upside due to the fact that we are most likely at the inflection point from ”Early Adopters” to ”Early Majority”.
Trump recently made a public statement implying that 50 million Americans already held ”crypto”. The most recent surveys among US consumers seem to support this number.
It is no surprise that cryptoassets have become a major topic during the US presidential election as the parties have become increasingly aware that cryptoasset users could play a significant role at the ballot.
Both Trump and Robert Kennedy Jr. are scheduled to deliver a pro-Bitcoin speech at the upcoming Bitcoin conference in Nashville over the weekend.
It seems as if cryptoasset users are not a small minority anymore that can be ignored.
Here are some recent US bitcoin and crypto adoption surveys for comparison (% of total population in brackets):
• Security.org: 93 mn (28%)
• Unchained: 86 mn (26%)
• Statista: 53.6 mn (16%)
• Morning Consult: 44.2 mn (13%)
• Finder: 38.4 mn (11%)
In general, cryptoasset adoption has been on the rise globally.
A recent global survey among institutional investors conducted by Fidelity even implies that 51% of surveyed institutional investors have already invested into cryptoassets such as Bitcoin.
Another recent consumer survey by Statista implies that approximately every 5th person (21%) worldwide has already invested into cryptoassets.
However, it’s important to highlight that among the top 10 regions with the highest adoption rates, 8 regions are developing countries.
So, cryptoasset adoption rates are even significantly higher among developing countries than in developed countries that often suffer from chronically high inflation rates and weak domestic currencies.
That being said, the data generally suggest that both the US and Europe may be at the cusp of mass retail adoption – a situation often referred to as “Hyperbitcoinization” in the context of Bitcoin.
The reason is that technological adoption in general tends to accelerate at the threshold from the so-called “early adopters” to the “early majority” which is around 16% adoption rate based on the model of technological adoption famously put forth by Rogers (1962).
Global adoption rates are already at 21% while adoption rates in the US and Europe are at around 16% and 14%, respectively. So, there is a strong case for an acceleration of adoption rates in these regions and globally over the coming years.
Recent political developments in the US also imply that Bitcoin and cryptoassets are gradually becoming mainstream.
Trump has recently endorsed domestic Bitcoin mining in the US and both Democrats and Republicans have started accepting crypto payments for campaign financing.
The big success of the spot Bitcoin ETFs this year and the fact that additional types of spot crypto ETFs are being launched marks a significant shift in sentiment among US regulators in this regard.
In short, chances are that the growth of adoption will surprise to the upside due to the fact that we are most-likely at the inflection point from ”Early Adopters” to ”Early Majority”.
Bottom Line
• Global crypto asset adoption rates are significantly higher than previously estimated.
• The data generally suggest that both the US and Europe may be at the cusp of mass retail adoption – a situation often referred to as “Hyperbitcoinization” in the context of Bitcoin.
• Chances are that the growth of adoption will surprise to the upside due to the fact that we are most likely at the inflection point from ”Early Adopters” to ”Early Majority”.
To read more about suitable investment solutions by ETC Group, please click the button below:
This is not investment advice. Capital at risk. Read the full disclaimer
© ETC Group 2019-2024 | All rights reserved
Are we about to enter âHyperbitcoinizationâ?
Investera i Optimism med en börshandlad produkt
JPGH ETF investerar i amerikanska tillvÀxtaktier
Bitcoin as a hedge against geopolitical risks?
DFND ETF investerar i flyg- och försvarsindustrin
Vilka var juni mÄnads populÀraste EFTer?
Harwood Capital Management samarbetar med HANetf för att lansera sin första UCITS ETF
Att tajma marknaden Àr en förlorande strategi
Börshandlade fonder ser inflöden pÄ mer Àn en halv miljon troy ounce platina
The Bitcoin Macro Investor
-
Nyheter4 veckor sedanVilka var juni mÄnads populÀraste EFTer?
-
Nyheter1 vecka sedanHarwood Capital Management samarbetar med HANetf för att lansera sin första UCITS ETF
-
Nyheter2 veckor sedanAtt tajma marknaden Àr en förlorande strategi
-
Nyheter3 veckor sedanBörshandlade fonder ser inflöden pÄ mer Àn en halv miljon troy ounce platina
-
Nyheter3 veckor sedanThe Bitcoin Macro Investor
-
Nyheter4 veckor sedanInvestera i koppar med hjÀlp av börshandlade produkter
-
Nyheter3 veckor sedanCETH ETP en börshandlad produkt pÄ Ethereum som ger staking intÀkter
-
Nyheter4 veckor sedanSyntetiska börshandlade fonder: Vad det Àr, hur det fungerar
