ARP's Crypto Digest

General Digital Asset Market View:

As of the second week of December 2024, U.S. Bitcoin ETFs have recorded a remarkable total inflow of $2.167 billion, bringing their combined holdings to over 1.12 million BTC after nearly a year in operation. Leading the way is BlackRock’s IBIT ETF, which has attracted $1.51 billion in inflows — more than double the $600 million secured by Fidelity’s FBTC ETF, the second-highest.

This marks the 12th consecutive week of positive inflows across 11 U.S. Bitcoin ETFs, totaling $5.3 billion during this period. This streak is now the third longest in ETF history, following a 19-week streak from May to June and a 17-week streak from January to February.

Macro:

The key focus this week is monetary policy with the Fed, BoJ and BoE all meeting (among others). With respect to data, the run of global flash PMIs are due on Monday while inflation data out of the US (PCE deflators), UK, Japan and Canada will also be in focus. The monthly data dump from China alongside US/UK retail sales and the latest UK labour market report will be similarly important.

More Crypto:

The crypto market has evolved significantly since the 2020–21 bull run, with stricter regulations and shifting user preferences reshaping the exchange landscape. While Binance remains the market leader, its dominance has waned due to regulatory challenges in multiple jurisdictions, creating opportunities for smaller exchanges to establish a foothold and expand their market share.

In the past three months, the ongoing market rally has primarily benefited Coinbase and Upbit, which have posted the strongest gains in market share. This divergence is particularly notable due to their distinct user bases: Coinbase derives more than 80% of its trading volume from institutional traders, while Upbit caters to risk-seeking retail investors.

On December 10, the volume of liquidations in altcoins ($1.75 billion) was the largest since May 19, 2021, and in the crypto derivatives market ($12.8 billion) it was a record.

The cascading liquidations were a feature of the 2021 bull run and appear to be repeating that pattern now.

Expressed in terms of market cap, open interest on altcoin perpetual contracts rose from 3.57% to 4.42% before falling to 3.96%.

Stablecoins Metrics and News:

Metrics:

While major cryptocurrencies like BTC and ether (ETH) tend to dominate the headlines and offer gains that stablecoins lack, stablecoins have surpassed all other types of cryptocurrencies in adoption, representing over half — and up to 75% — of all transaction volume on-chain in recent months.

The total market value of stablecoins crossed the $200 billion mark for the first time ever. The expansion was driven by capital inflows to trade crypto and increasing use for non-crypto utilities like payments, while a range of novel yield-generating products also fueled growth.

Stablecoins could double in market size to $400 billion next year, with the U.S. Congress passing legislation being a key catalyst, asset manager Bitwise said.

News:

• Binance partners with Circle to push USDC stablecoin adoption across the globe.

• Ripple receives final approval from New York State Department of Financial Services to launch RLUSD stablecoin

• Tether’s USDT recognized as Accepted Virtual Asset in Abu Dhabi Global Market (“ADGM”)

What Happened This Week:

• A lawmaker in the Texas House of Representatives has drafted legislation to create a Bitcoin reserve as part of the state’s treasury.

• Grayscale has introduced new crypto funds for $LDO, $OP, accessible to accredited investors.

• The Avalanche Foundation has announced that it has raised $250 million in a private locked-token sale led by Galaxy Digital, Dragonfly, and ParaFi Capital.

• Trump’s crypto project, Worldlibertyfi , has been consistently buying $ETH and $CBBTC, and today it made its first buys of $LINK $AAVE (~$1M).

• Microsoft shareholders voted down a resolution to include Bitcoin on the company’s balance sheets during the annual meeting.

What to Look Out For:

• Donald Trump stated, “I will be doing something significant with cryptocurrency.”

• Ethena announced that it will launch USDtb, a stablecoin backed by ~90% of Blackrock’s BUIDL, on December 16th.

• South Korea was supposed to start taxing cryptocurrencies in January 2025, but decided to delay the implementation to 2027.

• Goldman Sachs’ CEO has expressed interest in exploring opportunities within the Bitcoin and Ethereum markets, contingent upon regulatory approval.

• LayerZero will reportedly hold a vote on December 19 to switch fees.

What we enjoyed reading and listening to:

• Don’t try to onboard the next billion users to Ethereum, here’s a better way — Link

• Stablecoin Payments: Who Actually Wins? — Link

• From compute to creativity: AI’s collective awakening — Link

• The RWA Handbook (Part 1): History of the Real-World Assets — Link

• Why You Will Never Understand Blockchains — Link

ARP Digital is regulated by the Central Bank of Bahrain as a Category 3 Crypto Asset Service Provider. All communications and services are directed at Professional Clients only, persons other than Professional Clients, such as Retail Clients, are NOT the intended recipients of our communications or services. ARP Digital does not provide investment advice, and nothing herein shall be considered, construed as, or deemed to be, investment advice. Furthermore, nothing herein is intended to be, or shall constitute, an offer or invitation to buy securities or any form of financial instrument or investment product by ARP Digital or any of its related parties or persons.