Breaking Free from Bankruptcy, Settling Debts, and Surfin' Solana's JUPuary Wave

• Jupiter (JUP) token surges post-$700M Jupiter airdrop to Solana wallets
• Portal secures $34M in seed funding for decentralized bitcoin-based exchange development
• Celsius emerges from Chapter 11, initiates distribution of $3B+ cryptocurrency to creditors

Bitcoin ETF flows flip, options on deck, and Solana's JUPuary trip

Crypto markets traded in green this week, with bitcoin leading the charge. Bitcoin's dominance hovered just below the 55% mark, and the total crypto market cap teased the $1.6 trillion mark. Among the heavyweights, bitcoin led the pack with an impressive 6.3% rally compared to the previous week, while ether opted for a more subdued pace, notching a modest 2.2% weekly gain. Within the US-listed spot BTC universe, the weekly money flow direction did a flip-flop, transitioning from outflows to net inflows starting Friday. Additionally, it seems the GBTC outflows may have hit a peak, or at least a local one, last week. As of January 30, the first three days of the current week alone accumulated over $700 million. Since their debut, these assets collectively welcomed a commendable net inflow, clocking in at a solid $1.2 billion in less than a month.

The futures market has firmly established itself, spurred by the impressive growth witnessed in 2023. Spot BTC ETFs are gaining traction, finding their stride after a promising initial run. Now, attention is turning towards the options market as the next frontier for expansion. While the crypto options market experienced substantial growth in 2023, a significant portion of this surge occurred in non-regulated venues which are currently beyond the reach of the traditional finance world. Interestingly, all three exchanges currently hosting spot BTC ETFs have petitioned the SEC for approval to list options on these ETFs. The evaluation process by the SEC could span anywhere from one to eight months, and complications related to clearing and settlement processes add another layer of consideration. Should these applications receive the SEC's green light, the bitcoin options market is poised for a noteworthy boost. Currently, the bitcoin options market is divided between investors operating on offshore exchanges which are inaccessible to US individuals and platforms exclusively available to major institutions like the CME. Introducing options based on spot BTC ETFs has the potential to significantly broaden the options market, transcending the limitations of these two existing domains.

In the world of Layer 1 blockchains, the standout star of 2023, Solana, took the lead by surging past the $100 mark earlier this week, boasting a remarkable 9.4% week on week uptick. The Block's Data reported a substantial surge in transaction volume on the Solana blockchain throughout January, reaching levels significantly beyond those witnessed in 2023 and for the majority of 2022. Adding to the excitement, JUP, this week's talk of the town, marked one of the most significant token airdrops on the Solana (SOL) blockchain, seemingly executing smoothly as Jupiter distributed around $700 million worth of its JUP token to nearly a million wallets. Within the first hour of the launch, over 20% of the 1 billion JUP tokens allocated for Wednesday's airdrop had been claimed, as per a Flipside dashboard crafted by Marqu. Notably, Jupiter set aside a considerable portion of its tokens for distribution to users who traded through its routing service, a major player in on-chain swaps on Solana. Despite concerns about potential system disruptions, Solana, including its developers, deemed the airdrop a success, maintaining 100% uptime during the peak traffic of the Jupiter token airdrop claim and trading. However, like any significant launch, there were minor hiccups. Some RPC nodes, acting as intermediaries between wallets and the network, experienced challenges keeping up with user demands, especially in the first 30 minutes of the airdrop, as reported by validators in Solana's Discord server.

Journey beyond bankruptcy, customer reclamation, and capital resurgence

Solana concluded 2022 in the crosshairs as one of the most heavily shorted coins, primarily stemming from the aftermath of the FTX exchange implosion. The downfall of FTX, a major holder of SOL, contributed significantly to Solana's challenging position. Despite this, the resilient Solana developer community powered through, achieving noteworthy adoption milestones in the aftermath. Speaking of FTX, a recent court hearing revealed that FTX anticipates fully repaying its customers but has no plans to resurrect its defunct crypto exchange. However, the complete recovery of customer assets is contingent upon the point of FTX's actual bankruptcy, a period marked by market turmoil. This date, preliminarily approved by US Bankruptcy Judge John Dorsey, is a point of contention for some claimants. Notably, bitcoin's price has rebounded to over $42,580 at the time of writing, showcasing a remarkable 105% surge from its value of approximately $20,500 around the time of FTX's collapse in early November.

Celsius Network has officially emerged from Chapter 11 bankruptcy, marking the end of a challenging 18-month period during which user withdrawals were temporarily halted. The company announced on Wednesday that it has commenced the distribution of $3 billion in cryptocurrency and fiat to its creditors. As part of Celsius's approved reorganization plan, a portion of this amount will be used to establish Ionic Digital, a new bitcoin mining company, with ownership transferred to creditors. Celsius creditors will hold common shares in Ionic Digital, and the intention is to eventually make these shares publicly traded after securing necessary approvals. Hut 8, a mining company based in Miami, will oversee the mining operations of Ionic under a four-year management agreement. In light of this transition, Celsius Network is set to wind down its operations, leading to the closure of its mobile and web applications. The journey to this point began when Celsius declared bankruptcy on July 13, 2022, after encountering a $1.2 billion gap in its balance sheet. Meanwhile, the trial involving Celsius founder and former CEO, Alex Mashinsky, is scheduled to commence in September.

Portal, a fintech company facilitating easy access to bitcoin and other cryptocurrency markets, has stepped out of stealth mode, securing $34 million in seed funding. This funding round saw participation from notable players in both fintech and the cryptocurrency space, including Gate.io, Arrington Capital, Coinbase Ventures, and OKX Ventures. This seed capital builds upon the $8.5 million from an angel round that Portal successfully closed in 2021. In parallel news, the hiring trend in crypto trading firms continues, with GSR appointing Andreas Koukorinis, a former JPMorgan executive who served as the global head of electronic trading for credit and fixed income exchange-traded funds. Koukorinis joins GSR to enhance its digital assets trading capabilities as stated in the press release on Wednesday.

At this juncture, I might sound like a broken record, but on a weekly basis — macro considerations aside — the prevailing theme remains unchanged: a steady drumbeat of accumulation, ongoing improvements in infrastructure, the resolution of lingering issues from the last cycle, a fresh influx of capital into the industry, and strategic expansion of teams by forward-thinking firms.

Macro pulse 

Among TradFi assets, US stocks experienced a 0.4% decline compared to the previous week, driven by concerns in the banking sector and Powell's resistance to a March reduction. The Federal Reserve maintained interest rates at 5.25-5.50%, signaling a potential halt to additional hikes but emphasizing that a rate cut would only be considered with greater confidence in inflation reaching a sustainable 2%. Oil futures experienced a surge amidst escalating geopolitical tensions, yet later in the week relinquished some gains in the face of a broader risk-off sentiment and economic hurdles in China, resulting in a modest 1.1% weekly gain. Elsewhere, the US Dollar index rose 0.3% and the 10 year US treasury slipped 24 bps while the Gold & Silver posted a modest gain of 0.7% week on week.

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*Note: Weekly (7 calendar day) performance figures are as of 8am SGT on February 1, 2024 

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