Token Chronicle - Week 4 November 2024

Top cryptos

Meme of the week

Market update: Early in the week, a slight correction brought prices back to $92K, but they've since rebounded to $97K. ETH has made solid progress toward $3.7K, alongside a notable surge in altcoins, particularly XRP, which saw a significant boost following the resolution of its legal complications (linked to Gary Gensler’s departure) and the hype surrounding its stablecoin launch. There’s a wave of bullish news ahead, including governments thinking about building BTC reserves, corporate investments, and countries reopening to cryptocurrencies. Two main scenarios are being considered for the year's end:

1. Consolidation before breaking $100,000: This could take the form of a range phase above $90,000. However, a deeper correction into the $77,000–$85,000 zone cannot be ruled out, which would help mitigate recent excesses and build a solid foundation for a potential recovery.

2. Direct breakout followed by a pullback under $100,000: Bitcoin might break through the psychological $100,000 barrier forcefully, triggering a strong bullish momentum. However, this surge could be followed by a return below this symbolic threshold, paving the way for a deeper correction similar to the first scenario.

Main points this week:

International:

1. And then there were two: Deblock has become the second French company to receive a coveted certification—the PSAN (Digital Asset Service Provider) approval from the Financial Markets Authority (AMF) for crypto enterprises. Until now, only one company, SG Forge, a branch of Société Générale dedicated to cryptocurrencies, could boast this approval. Deblock, launched in April 2024, includes founders with backgrounds from Ledger and Revolut. According to CEO Jean Mayer, the swift application process reflects the company's intention to align with European standards, as the AMF’s PSAN approval is based on requirements similar to those of the MiCA regulation.

2. MiCA enters force in Europe while the UK prepares for its framework: MiCA will take effect in the European Union on December 30, 2024. Meanwhile, the UK, which has been independent of EU regulations for five years, plans to introduce its cryptocurrency framework in 2025.

3. Cautious South Korea avoids Bitcoin reserves: Amid global debates on digital asset futures and Donald Trump’s reelection, South Korea remains cautious. Instead of creating a national Bitcoin reserve, Seoul focuses on securely linking cryptocurrency markets with traditional financial systems. Kim Byung-hwan emphasizes protecting investors over creating reserves.

4. Brazil proposes strategic Bitcoin reserve: A legislative proposal for a Sovereign Strategic Reserve in Bitcoin (RESBit) suggests allocating up to 5% of Brazil's international reserves (around $370 million) in Bitcoin. Advocates argue that such a reserve would diversify Treasury assets, safeguard against geopolitical risks, and back Brazil's Central Bank Digital Currency (CBDC). However, the proposal is unlikely to pass in its current form, though it reflects growing interest in Bitcoin reserves since Trump’s election.

5. Morocco shifts toward crypto regulation: Once opposed to cryptocurrencies, Morocco is now working on a regulatory framework to catch up with global financial innovation. In 2017, the country's central bank and Foreign Exchange Office banned crypto transactions. However, with a surge in crypto users, Morocco has become a North African leader in the industry.

6. Hong Kong considers tax exemptions for crypto investments: To enhance its appeal, Hong Kong is set to exempt capital gains taxes for select investment funds, including family offices and venture capitalists. The Financial Services and the Treasury Bureau's broader project also targets private credits, carbon credits, and foreign properties. With over 2,700 family offices, the impact on local ETF inflows remains to be seen.

7. Switzerland explores Bitcoin mining: The canton of Bern will study the feasibility of Bitcoin mining, often criticized for its environmental impact. Advocates claim mining could accelerate ecological transition. Bern aims to determine its role in this controversial industry.

8. Russia tightens cryptocurrency regulations: Russia’s Federation Council approved and President Vladimir Putin signed a bill to regulate crypto taxation and mining. The law requires miners to register client names and associated profits. As the country seeks alternatives to the dollar, USDT has already been used in Russia-China exchanges. The new law underscores crypto’s strategic role as winter heightens electricity concerns.

9. Japan's Financial Services Agency (JFSA) has proposed a new category for crypto intermediaries to operate under relaxed rules, avoiding exchange registration requirements. These intermediaries can facilitate transactions but cannot hold customer assets and will be supervised by exchanges. The framework supports use cases like Web3 gaming, aligning with innovations like Sony's blockchain, Soneium. Part of the JFSA’s 2024/25 agenda, it aims to expedite stablecoin intermediary registration and promote global regulatory leadership.

10. Taiwan will enforce stricter crypto AML rules from Nov. 30, a month earlier than planned, requiring crypto providers to register for compliance. Non-compliance risks fines up to NT$5 million ($153,700) and 2 years imprisonment. Exchanges must implement listing/delisting procedures, unfair trading prevention, and anomaly detection. FSC Chair Jin-Lung Peng cited "urgent societal demands" for enhanced fraud prevention.

Regulation/Justice/Cyber

1. Gary Gensler will leave the SEC chairmanship on January 20: As expected since Donald Trump's election, Gary Gensler announced his resignation as chairman of the Securities and Exchange Commission (SEC), effective January 20.

2. Donald Trump avoids major judicial proceedings due to his election: Trump, at the center of two major cases, now benefits from immunity. The first case involved attempts to block the 2020 election, culminating in Capitol riots. The second related to classified documents found in his Mar-a-Lago residence in 2022, which led to 37 federal charges in June 2023. The U.S. Constitution prevents federal indictment of a sitting president, ensuring these cases do not proceed after the January 20 inauguration.

3. Potential shift in U.S. crypto regulation: President-elect Donald Trump is reportedly considering removing cryptocurrency regulation from the SEC's jurisdiction and assigning it to the Commodity Futures Trading Commission (CFTC), which already regulates the Bitcoin and Ether spot markets. While the SEC would retain its role over securities, the CFTC’s involvement aligns with its existing mandates. Despite its less aggressive reputation compared to the SEC, the CFTC has also initiated multiple lawsuits against the cryptocurrency sector.

4. Tornado Cash achieves a legal victory over OFAC sanctions: After a lengthy legal battle, Tornado Cash users successfully argued against placing the protocol's smart contract addresses on the Specially Designated Nationals (SDN) list. The ruling found that OFAC’s actions violated the International Emergency Economic Powers Act (IEEPA), as there was no evidence proving developers' ownership of the smart contracts. This decision could potentially renew interest in the protocol.

5. Corruption allegations at Binance: Former Binance Europe executive Amrita Srivastava claims she was fired in May 2023 after raising concerns about internal corruption. She alleged a colleague accepted a bribe to expedite a client’s onboarding via Binance Link. Binance stated that Srivastava was dismissed for poor performance and that the alleged issue was already under investigation before her report.

6. Defunct crypto lender Celsius is distributing $127 million in cash or crypto in its second bankruptcy payout, raising the recovery rate to 60.4% of petition date claims. Crypto payouts are valued at an average of $95,836.23 per BTC. Earlier, Celsius distributed $2 billion in January, recovering 57.65% of eligible claims. The company filed for bankruptcy in 2022 after a $1.2 billion shortfall was uncovered. Former CEO Alex Mashinsky faces fraud charges and a possible 115-year sentence.

Traditional Finance:

1. Charles Schwab enters the cryptocurrency market with $10 trillion in assets. Unlike traditional institutional players like Vanguard, Schwab aims to allow direct cryptocurrency trading for its clients. The firm already provides diverse tools for crypto exposure, including ETFs, Bitcoin Futures, and Closed-End Funds. According to Rick Wurster, “We’d like to offer cryptocurrencies directly to our clients.”

2. Pantera reveals a staggering 131,165% return on its Bitcoin fund. With the recent BTC surge, Pantera's CEO shared that since the fund's inception in 2013, when Bitcoin was priced at $74, BTC has increased over 1,300 times. Pantera acquired 2% of BTC between 2013 and 2015. A 2013 email from Dan Morehead highlighted his vision of Bitcoin as a critical investment, back when its market cap was just $740,000.

3. Bernstein and Canaccord have raised their MicroStrategy price targets, reflecting bullish outlooks for the stock. Bernstein increased its target to $600 (from $290), and Canaccord raised its target to $510 (from $300). Analysts project MicroStrategy could own 4% of the world's Bitcoin supply by 2033, up from its current 1.7%. The company recently announced plans to purchase $42 billion in Bitcoin over the next three years. Analysts cited a structural bull market for Bitcoin, driven by favorable regulations, U.S. government support, institutional adoption, and positive macro conditions.

4. WisdomTree has filed for an XRP ETF, adding to the list of firms aiming to launch XRP investment products in the U.S. The filing comes as XRP surged to a three-year high of $1.60, driven by expectations of a favorable regulatory shift. Other firms like 21Shares and Bitwise are also pursuing XRP ETFs, signaling growing interest in the asset. Despite the ongoing legal battle between the SEC and Ripple, which has delayed ETF approvals, optimism remains high, with market participants anticipating regulatory changes in 2025.

5. Partior, a blockchain payment network backed by JPMorgan, DBS, and Standard Chartered, has added Deutsche Bank as an investor. The German bank joined Partior's $80 million Series B funding round as a strategic partner, according to a company press release. Deutsche Bank will also serve as a euro and U.S. dollar settlement bank on Partior's platform, furthering its integration into blockchain-based payments. The announcement highlights the growing blockchain adoption in traditional finance; last week, Mastercard partnered with JPMorgan for cross-border blockchain payments. Patricia Sullivan, Deutsche Bank’s global head of institutional cash management, emphasized the disruption in payments driven by technology, financial inclusion, and transparency.

Investments/Fundraising:

1. MicroStrategy shares (MSTR) plummet 25% after Citron Research initiates a short position. Citron described MSTR as "overheated," arguing its valuation diverges from Bitcoin fundamentals. Despite this, MicroStrategy's continued BTC purchases could sustain its stock's upward momentum due to investor sentiment.

2. Hoth Therapeutics and Acurx Pharmaceuticals invest $1 million in Bitcoin. These biopharma companies diversify their assets as BTC nears $100,000. Hoth focuses on skin diseases and autoimmune disorders, while Acurx develops antibiotics for complex bacterial infections.

3. Allianz invests $2.6 billion in MicroStrategy convertible bonds. This move underscores Bitcoin’s growing institutional adoption, particularly in Europe, as Allianz strengthens its BTC exposure.

4. Rumble adds $20 million in Bitcoin reserves. The video-sharing platform, valued at $2 billion, explores crypto donation features. With ties to the conservative U.S. political sphere, Rumble reflects a broader trend of companies adopting BTC as a reserve asset.

5. MicroStrategy has acquired 55,500 BTC for $5.4 billion between Nov. 18–24, marking its largest purchase yet, per an SEC filing. This follows a $3 billion debt offering and $2.46 billion share sale during the same period. The firm now holds 386,700 BTC worth $37 billion, bought at an average of $56,761 per BTC. MicroStrategy plans to raise $42 billion via equity and debt to fund future acquisitions, with $12.8 billion in shares still available under its $21 billion equity offering.

6. Bitcoin miner MARA has acquired 6,474 BTC worth $615 million, increasing its holdings to 34,794 BTC valued at $3.3 billion—the largest among public miners. The purchase follows a $1 billion 0% convertible note offering due 2030, with $199 million used to repurchase its 2026 note. BTC was acquired at an average price of $95,395, with $160 million reserved for further acquisitions. MARA’s stock rose 7.8% to $26.92 on Wednesday, up 52% this month, reaching a market cap of $8.7 billion.

Ecosystem News:

1. Dogecoin (DOGE) seeks sponsors for long-term ecosystem growth. DOGE plans to develop a decentralized payment infrastructure, the "Dogebox," aiming to onboard a million merchants for direct DOGE payments.

2. Bitcoin-backed loans emerge through a Tether and Cantor Fitzgerald partnership. Clients can now borrow dollars using BTC as collateral. Cantor Fitzgerald, a major Tether shareholder and U.S. Treasury bond dealer, stores $133 billion of Tether's reserves. This initiative could bridge crypto wealth with real-world investments.

3. Monad blockchain launches public testnet with EVM compatibility. Promising 10,000 TPS and one-second block finality, Monad aims to be the fastest, most cost-efficient, and censorship-resistant EVM-compatible Layer 1. To date, it has raised $244 million from major investors like Paradigm, OKX Ventures, and Dragonfly Capital.

4. Ripple nears approval for its RLUSD stablecoin. Amid speculation, XRP's market cap surpassed $100 billion, driven by optimism around Ripple's regulatory success and expanding ecosystem.

5. Sky Mavis, the developer of Axie Infinity, is laying off 21% of its workforce (about 50 employees) as part of a "strategic shift," according to CEO Trung Nguyen. This move is aimed at focusing on expanding the Ronin Network, Mavis Marketplace, and creating a new Axie Infinity game. The layoffs are unrelated to financial health, as the company gears up for "hypergrowth" in 2025. Sky Mavis, founded in 2018, peaked at 2.7M daily active users during the pandemic but faced challenges, including a $600M Ronin sidechain hack in 2022.

6. Analysts from Wintermute and QCP Capital report capital shifting from Bitcoin to Ether, highlighting confidence in ETH's near-term upside. Ether rose 6% in 24 hours, briefly exceeding $3,500, while Bitcoin dropped 1% to $95,000. Strong demand for ETH call options and record-high open interest reflect a preference for Ether’s growth potential. The shift is also driving OTC demand for Ethereum-based altcoins like Pepe, up 50% in two weeks, as traders anticipate Bitcoin to move sideways until December.

7. Binance will launch BFUSD on Nov. 27, a reward-bearing margin asset offering passive rewards for holders and traders. The APY is guaranteed to never drop below zero, supported by a BFUSD Reserve Fund seeded with 1 million USDT. Rewards stem from delta hedging and staking strategies, with daily APY subject to market conditions. BFUSD is exclusive to Binance futures accounts, redeemable for USDT only but not tradeable or withdrawable like stablecoins. Fees for BFUSD transactions are waived until Dec. 26 during a promotional period.

Focus: ICOs Revisited: A Comeback Story?

Initial Coin Offerings (ICOs) surged in popularity during the 2017 crypto boom, raising billions and driving blockchain adoption. However, after the 2018 crash and heightened regulatory scrutiny, the model fell out of favor. Now, a renewed interest in ICOs is emerging, fueled by potential regulatory shifts and frustrations with current funding models. Industry experts suggest that a pro-innovation stance in the upcoming U.S. administration could reduce SEC enforcement fears, making ICOs more appealing to founders and investors alike.

Retail investors are also pushing this resurgence. Unlike venture capital (VC)-dominated funding rounds, ICOs provide opportunities for broader community involvement and fairer token distributions. Critics argue that VC-driven models often sideline retail participants, offering inflated valuations with limited upside. The shortcomings of token airdrops—such as poor user retention and post-launch selling pressure—further underscore the need for alternative mechanisms like ICOs.

Platforms like Legion and Echo are shaping this new wave, incorporating safeguards such as reputation scores and compliance with regulatory frameworks like the EU's MiCA law. These platforms aim to ensure high-quality projects while addressing concerns of token dumping and community engagement. For example, Legion’s recent ICO sale for Pulse exceeded expectations, highlighting growing interest in structured, community-focused fundraising.

ICOs’ resurgence could also counter trends like memecoin mania by encouraging genuine community-building over speculative hype. However, experts agree that ICOs alone cannot replace VC support. A hybrid model combining ICO-driven retail involvement and VC expertise may be the most sustainable path forward, offering broad participation while retaining strategic guidance for project growth.

Disclaimer: The information disclosed here does not constitute an investment advice ; it is for informational purposes only and does not constitute investment advice. You should do your own research while investing in crypto and only invest money you are ready to lose.