Weekly Market Insight: December Week 4

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Market Updates

23 Dec 2024

Headline News

- Bitcoin prices decreased by 8.88% last week, the sharpest drop since August 2024, as the result of hawkish rate-cut projection in 2025 from the U.S. Federal Reserve. The sell-off liquidated approximately $1 billion worth of perpetual contracts, cascaded the selling pressure.
- Looking ahead, trading volume is expected to decline during the holiday season, investors tend to rebalance portfolios and sell underperforming cryptocurrencies for tax purposes. Large volatility is expected ahead, as more than $13 billion notional value option contracts are expiring on the upcoming Friday, December 27.

- Jerome Powell announced a 25 basis point rate cut during last week’s FOMC meeting. While the move aligned with market expectations, the committee’s updated projection reduced the anticipated rate cuts for 2025 from four to two. This more hawkish stance exerted downward pressure on broader markets. Concurrently, the expected inflation rate for 2025 was revised upward from 2.1% (as projected in September) to 2.5%, likely reflecting the potential impact of tariffs on inflation.
- The U.S. Retail sales increased by 0.7% in November, higher than the market expectation of 0.5%. The U.S. Q3 GDP increased to 3.1%, higher than 2.8% in the second estimate. The headline PCE price index in November increased to 2.4%, slightly lower than the market expectation of 2.5%. Personal income increased by 0.3% in November, while personal spending increased by 0.4% in the same period, both 10bps below market expectation.

- Binance launched Binance Alpha, a new platform within Binance Wallet that shines early-stage crypto tokens. It also serves as a pre-listing token selection pool for Binance Exchange.
- Deutsche Bank is reportedly working on a new Ethereum Layer 2, Dama 2, which leverages ZKsync stacks.
- SEC approved first spot Bitcoin and Ethereum combo ETFs from Hashdex and Franklin Templeton.

- Avalanche has completed its Avalanche9000 upgrade. Avalanche also introduced the infraBUIDL(AI) Program, up to $15 million in direct funding and retroactive grants to accelerate AI development within Avalanche ecosystem.
- Ripple launched RLUSD, its fiat-backed US dollar stablecoin, on the XRP Ledger.
- Polygon rejected the proposal to use over $1 billion in stablecoin from the bridge contract for yield farming.
- Kraken launched its Ethereum Layer-2, Ink, on mainnet.
- Sonic launched its mainnet, offering up to 10,000 tps, sub-second finality and a native decentralised gateway to Ethereum.
- Stacks launched sBTC on the mainnet, with an initial phase of deposits limit of 1,000 BTC and withdrawals will be available in later Q1. sBTC currently offers 5% APY, paid by sBTC.
- Omni Network launched its mainnet, enabling users access to liquidity across Ethereum, Arbitrum, Optimism and Base from its network.
- Saga launched Saga Mainnet 2.0, setting stage for Liquidity Integration Layer (LIL) in Q1 2025, unified liquidity across all chains, gasless DeFi interactions, Uniswap V3 integration, EVM runtime powered by Evmos and more.
- Aptos CEO, Mo Shaikh stepped down to "start a new chapter".

- Lido announced discontinued support for liquid staking solution, stMATIC, on Polygon POS.
- Ethena introduced USDtb, a new stablecoin backed by BlackRock's BUIDL Fund, potentially serving as an alternative solution during negative funding rates environment. Ethena later partners with Usual to include USDtb as collateral for USD0. Lastly, Ethena also partners with World Liberty Finance to list sUSDe as asset collateral on the platform.
- Usual introduced USUALx, its liquid staking token which entitled to 10% of all USUAL distributions, 33.33% of system fees and future rights to DAO treasury.
- Mocaverse, a NFT collection backed by Animoca Brands, announced Moca 3.0, a chain-agnostic digital identity infrastructure.

- Ethereum validators are suggesting an increase in the gas limit which potentially reduces the transaction fees by 15% to 33%. Among the validators include core Ethereum developers, Eric Connor and Justin Drake.
- Mantra community is voting on the proposal to update OM vesting schedule. Multiple allocations will end their cliff schedules in 2025, with the earliest on March 2025, and implement a linear vesting schedule moving forward. The proposal also suggests decreasing on-chain inflation from 8% to 3% starting year 2025.
- Uniswap announced Unichain testnet will undergo permissionless fault proofs upgrade on January 6, 2025. Mainnet will be open after the new system's safety and stability are validated.
- Ether.Fi passed the proposal to allocate 5% of the protocol revenue to buyback ETHFI and redistribute back to ETHFI stakers.
- Frax proposed to use BUIDL as one of the backing assets for FraxUSD.
- Fluid proposed to launch Fluid DEX and FLUID token on Arbitrum.
- Founder of Doodles NFT teased token release soon.

- IMX token unlocked on December 27th, amount representing 1.44% of the token supply.
- GRASS token unlocked on December 28th, amount representing 1.52% of the token supply.
- PRIME token unlocked on December 31st, amount representing 1.47% of the token supply.
- OP token unlocked on December 31st, amount representing 2.55% of the token supply.
- SUI token unlocked on January 1st, amount representing 2.8% of the token supply.
- JTO token unlocked on January 7th, amount representing 4.15% of the token supply.
- MOVE token unlocked on January 9th, amount representing 2.24% of the token supply.
- IO token unlocked on January 11th, amount representing 2.76% of the token supply.

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