Crypto Skies Cheer and Capital Queues Near

• Blackrock's spot bitcoin ETF records a historic $612.1 million in inflows within a single day
• Gemini agrees to return $1.1 billion to customers and pay a fine as part of a regulatory settlement
• Ether.fi, an Ethereum liquid restaking protocol, closes a $27 million investment round

I(BIT) $600 milllion+ a day but give me moar

Crypto markets continued their upward trajectory for the fifth consecutive week, propelling the total market capitalization of the crypto universe to surpass $2.29 trillion, marking a weekly gain of 16.2%. Bitcoin led the rally, reclaiming dominance in the crypto space with its market share rising above 53.5%. Among the majors, bitcoin surged by 20.6%, while ether posted a solid 14% gain compared to the previous week. In the US-listed spot bitcoin ETF universe, a familiar pattern persisted: GBTC witnessed outflows while other ETFs, notably Blackrock's IBIT, saw substantial inflows. As of February 27, 2024, total net inflows into spot bitcoin ETFs reached $7.4 billion since their introduction on January 11, 2024. Notably, IBIT traded $3.3 billion on Wednesday alone, doubling its previous volume record. Halfway into Wednesday's session, IBIT emerged as the fourth most traded ETF in the US, with three other new spot bitcoin ETFs ranking in the top 20, according to Eric Balchunas, senior ETF analyst at Bloomberg Intelligence.

Within the decentralized exchange (DEX) realm, Uniswap emerged as a standout performer, experiencing a remarkable 47.9% surge week over week. This surge followed a proposal presented by Erin Koen, the governance lead at Uniswap Foundation, aimed at revamping the protocol's governance structure. Koen's proposal seeks to fortify and revitalize Uniswap's governance while also introducing rewards for UNI token holders who have staked and delegated their tokens. This proposal marks a significant milestone for the largest decentralized exchange by trading volume, signaling a departure from last year's initiative to distribute accrued fees to token holders. Notably, in June of the previous year, the Uniswap community rejected a proposal to activate fees for several liquidity pools on the exchange and allocate a portion of the revenue to token holders. In an October update, Uniswap began implementing a 0.15% fee on cryptocurrency swaps involving ETH, USDC, and other tokens initiated through the protocol's interface. If Friday's proposed overhaul garners approval in a community vote, it would facilitate the permissionless and programmatic collection of protocol fees, distributing them proportionally to UNI token holders who have staked and delegated their votes.

In the gaming sector, Gala Games took the lead with an impressive 38.2% surge compared to the previous week. This surge coincided with Gala's announcement on Tuesday of the launch of GalaSwap, a novel decentralized exchange (DEX) established on Gala's proprietary network, GalaChain. Gala asserts that its DEX has the capacity to process over 2 million transactions per second, thanks to the Layer-1 chain's horizontal scaling methodology, supported by approximately 43,000 user-operated nodes. Moreover, Gala claims to offer lower fees compared to decentralized exchanges operating on general purpose chains such as Ethereum and Solana. Presently, the exchange facilitates trading exclusively between Ethereum-based tokens within the Gala ecosystem. However, an upcoming update will expand trading capabilities to include NFTs. The update will initially start with Gala's own NFTs before broadening compatibility. In the meme coin domain, Dogecoin (DOGE) experienced a notable surge of 37.8% compared to the previous week. This surge was largely driven by the announcement from major Japanese exchange Bitflyer regarding the listing of the token.

Legal skies clear, cash flow near

Crypto exchange Gemini, has agreed to pay a $37 million fine to resolve a lawsuit with a New York regulator, as announced on Wednesday. In addition to the fine, Gemini has committed to returning at least $1.1 billion to customers of its Gemini Earn lending program. This settlement, facilitated by the New York State Department of Financial Services, marks a significant development in the legal proceedings surrounding the Gemini Earn program, which was started by the Winklevoss twins-led company in 2021. The program allowed Gemini customers to loan their cryptocurrency to Genesis Global Capital, LLC, which has since declared bankruptcy. Gemini has stated that if the settlement receives approval from the bankruptcy court, Earn users will be reimbursed with "100% of their digital assets back in kind". Concurrently, the New York Attorney General's Office has filed a lawsuit against Gemini, Genesis Global Holdco, and Digital Currency Group over the crypto lending program. Notably, Genesis Global Holdco recently reached a resolution with the NYAG regarding the matter.

In a recent Series A funding round, alumni from FTX and Alameda successfully raised $17 million for their crypto exchange, Backpack, valuing the company at $120 million. The funding was secured from firms like Wintermute and Amber Group. Launched in October last year, nearly a year after FTX's collapse, Backpack is co-founded by Armani Ferrante and Can Sun. Ferrante, Backpack’s CEO, was an early employee at Alameda. The Dubai-based exchange has a 40-person team, including five former FTX employees, and has attracted 420,000 users globally. With $6.5 billion in trading volume this month, Backpack aims to capture market share in Asian markets, building on the momentum left by FTX.

In another development, the liquid Ethereum restaking protocol Ether.fi raised $27 million in a funding round led by Bullish and CoinFund. Ether.fi boasts nearly $1.7 billion in total value locked, making it the leading Ethereum liquid restaking platform, according to DeFi Llama. Ether.fi not only stakes users' ETH but also their eETH, a token derived from staking ETH. The protocol is powered by EigenLayer, which received a $100 million investment last Thursday from Andreessen Horowitz. This funding places EigenLayer in an elite group that has raised nine figures in a venture round over the past few months, alongside HashKey and Wormhole. EigenLayer enables staked ether, which secures the Ethereum blockchain, to be "restaked" for securing other chains and services.

HashKey OTC, the over-the-counter trading arm of HashKey Group, announced that they have received in-principle approval from the Monetary Authority of Singapore (MAS) for a major payment institution license (MPI). Currently, HashKey OTC operates under a licensing exemption in Singapore, catering to accredited investors and financial institutions. Their services include spot trading for 40 digital assets with liquidity support, fiat-to-crypto on-ramp services, and facilitating large notional trades. The in-principle approval for HashKey OTC's MPI license application follows the issuance of a Capital Markets Services license for fund management to HashKey by MAS in December 2023. HashKey Group operates one of the two licensed crypto exchanges in Hong Kong for virtual assets trading, alongside OSL Exchange.

The cryptocurrency market continues to look bullish, with traders finding opportunities in various strategies, including directional bets and event-driven trading. Basis continues to widen, offering lucrative delta-neutral opportunities. Bitcoin continues to lead the market rally, supported by strong inflows into the ETF space and anticipation around the upcoming halving event. Historically, bitcoin has led price movements before ether and other altcoins follow suit. This time may be different. If not, then ether's potential trajectory will be closely watched, particularly if an ETF approval occurs later this year. Price action could be steeper if we see a similar level of demand for spot ETH ETFs as for BTC, considering the constrained supply due to factors such as the growth of staking, increased utilization of the Ethereum network, and the ETH burn mechanism.

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Macro pulse 

Among the TradFi assets, US equities printed a fresh high last Thursday, largely propelled by the NVIDIA wave. However, this week saw a retraction of those gains, resulting in a modest weekly increase of 1.8%. Traders have tempered their expectations for Federal Reserve interest rate cuts following robust data releases, including strong readings on the consumer price index (CPI) and producer price index (PPI). Anticipations for an easing cycle to commence in June have replaced earlier predictions of a March start which were prevalent at the beginning of 2024. Oil futures exhibited mixed performance, with a marginal weekly gain of 0.3%, amidst rising crude inventories and deliberations within OPEC+ regarding extending production cuts. Meanwhile, the US Dollar index remained unchanged, the 10 year US Treasury yield slipped by 5 basis points, and the Gold & Silver index experienced a 3.8% decline week on week.

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*Note: Weekly (7 calendar day) performance figures are as of 8am SGT on February 29, 2024 

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