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SEC Sues Terraform Labs, Polygon Sets Date for its Scaling Solution, and More!
The crypto market performed well in a week filled with regulatory actions from the US and Hong Kong, exciting developments for blockchain-scaling solutions, and the anticipated token airdrop of the NFT marketplace Blur. Bitcoin and Ethereum traded up 13.85% and 12.99% week-over-week, respectively, while Solana outperformed the majors with a 25.99% return. On the scaling front, Polygon traded up 23.53% as it set March 27 as the target date for the launch of its Ethereum-compatible upgrade (zkEVM). Finally, Lido stood out in the DeFi sector with a 22.69% price increase. The staking platform will benefit from the Shanghai upgrade, expected around mid-March, as it will enable staked ETH withdrawals on Ethereum. Last week, Ethereum core developers agreed on February 28 as the target date for a new withdrawal-testing phase dubbed the Sepolia testnet.
Figure 1: Weekly TVL and Price Performance of Major Crypto Categories
Source: 21Shares, CoinGecko, DeFi Llama. Data as of February 20 (close price).
Key takeaways:
• The SEC sues Do Kwon and Terraform Labs nine months after the collapse of UST, while Hong Kong is planning to lift the ban on retail crypto trading.
• Polygon to deploy zkEVM rollup on March 27, zkSync opens up mainnet deployment for pre-registered applications.
• Siemens issues a 60M Euro-dominated public bond on Polygon, Centrifuge proposing to back Aave’s GHO with RWAs.
• NFT marketplace Blur airdropped its token BLUR, and OpenSea responded by temporarily moving to a zero-fee scheme to retain users.
Spot and Derivatives Markets
Figure 2 – BTC Funding Rates
Source: lookintobitcoin.com
If we look at the derivatives market, BTC funding rates for perpetual futures have been consistently positive for over a month since January 15, indicating that many investors are positioned to the upside (see Figure 2). The fact that we are seeing positive funding rates with Bitcoin up ~50% year-to-date also suggests an increase in risk appetite.
On-chain Indicators
Figure 3: USDC, BUSD, and USDT Market Capitalization
Source: Glassnode
The crackdown on BUSD instigated by the New York regulator (NYDFS) has instantaneously shown its impact on the stablecoin market. The Binance-branded, yet Paxos-issued, stablecoin has fallen off a cliff as roughly 3 billion tokens were redeemed since February 13. Although USDT, depicted in the green line, has steadily increased in market cap since the beginning of the year, the recent clampdown has injected life into Tether. The rise could also be supported by the stablecoin issuer’s update last week, reporting that an excess reserve of 81% of cash and cash equivalents are now backing USDT.
Next Week’s Calendar
Source: 21Shares, TradingView
Read our full report here
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”.
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