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Next FOMC meeting: Mar 20th 2024
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Ethiopia Emerges as a New Hub for Chinese Crypto Mining Operations
Chinese crypto mining companies are increasingly setting up operations in Ethiopia, drawn by the country's legalization of Bitcoin mining in 2022 and its cheap electricity, which is 92% generated by hydropower. Despite Ethiopia's ban on cryptocurrency trading, a Bloomberg report indicates that 19 out of 21 companies engaging with Ethiopia's power monopoly are Chinese, motivated by low energy costs and a temperate climate that offers operational advantages over hotter regions like Texas. However, these ventures face risks such as potential government policy reversals and political instability, similar to situations experienced in Iran and Kazakhstan. Some companies reportedly disguise their mining activities as different businesses to secure electricity access without official approval. This shift towards Ethiopia reflects a broader interest in Africa's renewable energy potential for crypto mining, as seen in projects like the use of hydropower in the Democratic Republic of Congo to support conservation and local communities.
Solana Mobile Surges with 100,000 Pre-Orders for Second Crypto Phone
Solana Mobile's second crypto phone has garnered 100,000 pre-orders in just over a month, signaling strong market interest and enabling the company to proceed with its $45 million plan to deliver the new devices by early 2025. This marks a significant turnaround from its first crypto phone, which took nearly a year to sell 20,000 units. Solana co-founder Anatoly Yakovenko attributes the success to the viability of producing an affordable device, given the substantial pre-order base, contrasting with the first phone's challenging economics. The popularity of Solana Mobile's devices, distinguished by their crypto-specific functionalities and the inclusion of free tokens, demonstrates a growing consumer base interested in cryptocurrency-integrated smartphones. This achievement not only secures Solana Mobile's position in the market but also aims to attract app developers by offering a lower commission rate on its app store, potentially challenging the dominance of Apple and Google in the app market.
NYAG's Lawsuit Against Digital Currency Group Now Alleges Over $3 Billion in Investor Losses
New York Attorney General Letitia James has escalated the state's lawsuit against Digital Currency Group (DCG), tripling the alleged fraud amount to over $3 billion after uncovering additional investor losses. Initially focusing on the Gemini Earn crypto lending program, the lawsuit now also addresses wider investor losses tied to DCG’s affiliate Genesis. Originally, the lawsuit claimed that Gemini, Genesis, and DCG defrauded over 29,000 New Yorkers of more than $1 billion. The amended complaint expands this to allege that more than 230,000 investors were defrauded out of over $3 billion. This update follows Genesis Global Holdco's bankruptcy filing in January 2022 and a recent settlement with the NYAG awaiting court approval. Furthermore, Genesis settled with the SEC for $21 million over unregistered securities offerings allegations. Despite these developments, DCG insists the complaint is baseless and expects full vindication.
Trading Desk Insights
Bitcoin experienced a robust surge of approximately 15% last week, marking its most impressive performance since October. The prevailing price action appears constructive, primarily driven by consistent inflows into ETFs. Despite the current price levels, our support remains steadfast at 43,300. There's a notable focus among market participants on achieving a breakthrough above the $50,000 threshold in the near future.
In the ETH landscape, transaction fees have reached a multi-month high, while the percentage of ETH staked has hit 25% for the first time, amounting to approximately $73 billion. Staking rewards have declined from the post-Shapella peak of 8.6% to now under 4%. The network is witnessing a surge in the number of validators seeking to stake their ETH, as evidenced by the entry queue reaching 7,045, the highest since October 6, according to data from ValidatorQueue.
Over the weekend, memecoins on the Solana (SOL) network displayed notable performance, with BONK experiencing a 25% increase in two days and WUF surging by 45% in the same period. This positive momentum occurred despite a recent pullback that initiated on Sunday.
Shifting focus to ETF flows, Friday recorded inflows of $541.5 million, representing the second-largest day of inflows since the launch on January 11th. While inflows into bitcoin ETFs have been relatively moderate, some advisors view them as the inaugural true bridge between traditional finance and the crypto community. According to CryptoQuant, Bitcoin ETF flows could potentially drive BTC prices to $112,000 this year.
In the U.S. stock market, futures remained close to the flatline early Monday, following a record-setting week for the S&P 500, which closed above 5,000 for the first time in history. The broader index has seen a rise of more than 5% since the beginning of the year.
Traders are keenly observing the latest Consumer Price Index (CPI), a pivotal gauge of inflation, scheduled for release on Tuesday morning.
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Disclaimer
This research is for informational use only. This is not investment advice. Other than disclosures relating to Secure Digital Markets this research is based on current public information that we consider reliable, but we do not represent it is accurate or complete, and it should not be relied on as such. The information, opinions, estimates, and forecasts contained herein are as of the date hereof and are subject to change without prior notification. We seek to update our research as appropriate.
Any forecasts contained herein are for illustrative purposes only and are not to be relied upon as advice or interpreted as a recommendation. The price of crypto assets may rise or fall because of changes in the broad market or changes in a company's financial condition, sometimes rapidly or unpredictably. Past performance is not a guide to future performance, future returns are not guaranteed, and a loss of original capital may occur. Fluctuations in exchange rates could have adverse effects on the value or price of, or income derived from, certain investments. We and our affiliates, officers, directors, and employees, excluding equity and credit analysts, will from time to time have long or short positions in, act as principal in, and buy or sell, the securities or derivatives, if any, referred to in this research.
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