THE COIN STREET JOURNAL
Market News - September 24th 2024
THE PAST WEEK HAS BEEN EVENTFUL FOR THE CRYPTO WORLD
The past week has been eventful for the crypto world, with major developments across various prominent cryptocurrencies and platforms such as Bitcoin, Binance, Ethereum, Solana, and Ripple. These developments showcase both the growth of crypto adoption and the challenges the industry continues to face. From regulatory updates to technological breakthroughs, the crypto ecosystem is rapidly evolving, positioning itself as a key player in global economic and technological innovation.
One of the most significant pieces of news was from Louisiana, which became one of the first U.S. states to accept Bitcoin and other cryptocurrencies for public payments. This bold move is designed to offer citizens more flexibility, particularly targeting younger, tech-savvy populations. By allowing residents to use crypto for taxes and administrative services, Louisiana hopes to set an example for other states and countries, further pushing the boundaries of cryptocurrency adoption. This initiative may encourage other governments to reconsider their approach to crypto, potentially leading to more mainstream acceptance and regulation.
Ripple made headlines as well, following a mysterious transaction by its co-founder Chris Larsen. Larsen transferred 50 million XRP, equivalent to around $29 million, from his personal wallet to an unknown address. This unexpected move caused XRP’s price to jump by 4%, with a subsequent surge in trading volume. The transfer, representing a significant portion of Larsen’s holdings, raised speculation about a potential large-scale sale or political donation, especially since it coincided with his political support for Kamala Harris. This event also occurred amid Ripple’s ongoing efforts to attract institutional investors through initiatives like the Grayscale XRP Trust.
Solana, another major player in the crypto scene, made waves with the launch of Play Solana’s PSG1, the first portable Web3 gaming console built entirely on the Solana blockchain. This groundbreaking product aims to revolutionize the gaming industry by offering a secure, decentralized gaming experience with fast and low-cost crypto transactions. The console’s launch underscores the increasing integration of blockchain technology into various sectors, including gaming, and highlights Solana’s ambitions to lead in Web3 innovation.
On the broader regulatory front, the crypto market continues to be a battleground as it grapples with economic challenges and tighter government scrutiny. While some regions like Louisiana are embracing cryptocurrency, others remain cautious or are actively pushing for stricter regulations. This duality reflects the uncertainty surrounding the future of digital assets as governments worldwide weigh the risks and benefits of integrating them into their financial systems.
Technological advancements have also been a key focus in the crypto industry, with platforms like Solana and Ethereum continuing to push the boundaries of what’s possible with blockchain technology. These advancements are crucial as they help improve the scalability, security, and accessibility of blockchain-based applications. As more projects explore the potential of decentralized technology, the crypto ecosystem is expected to expand its reach and impact across various industries.
Despite the ongoing regulatory challenges, the cryptocurrency market continues to attract attention from institutional investors. Projects like Ripple’s Grayscale XRP Trust aim to make digital assets more accessible to large-scale investors, which could further legitimize the market. As traditional financial institutions begin to explore crypto investments, this could lead to a significant increase in market stability and maturity.
In summary, the past week’s developments highlight both the potential and the challenges facing the cryptocurrency industry. From regulatory breakthroughs like Louisiana’s acceptance of Bitcoin for public payments to innovative product launches like Solana’s Web3 gaming console, the crypto world is evolving rapidly. As these developments unfold, they will likely shape the future of finance, technology, and digital innovation.
KAMALA HARRIS FINALLY MAKES PUBLIC COMMENTS ABOUT CRYPTOCURRENCY
United States Vice President Kamala Harris has made her first public comments about cryptocurrency during her campaign for the presidency. Speaking at a Wall Street fundraiser, she emphasized the importance of supporting innovative technologies, including artificial intelligence (AI) and digital assets, while ensuring consumer protection. Harris committed to fostering a competitive environment for emerging industries, including semiconductors and clean energy, through investments that would advance the country’s future, according to Bloomberg’s report from September 22.
Harris highlighted the need for a “safe business environment” with clear and transparent rules. Her remarks signal her intention to invest in industries crucial to America’s growth, while also emphasizing the reduction of bureaucratic barriers. This marks her first public stance on crypto since becoming the Democratic Party’s leading candidate for the presidential race, in contrast to her Republican opponent, Donald Trump, who has actively courted support from the crypto sector.
Speculation has grown around whether Harris would differ in her approach to cryptocurrency compared to current President Joe Biden, whose administration has been perceived as less favorable to the industry. In August, Harris’ senior campaign adviser, Brian Nelson, hinted that her administration would likely support crypto policies if she won the presidency. However, Harris emphasized the need for consistent “rules of the road,” particularly in light of recent company failures in the crypto space.
Faryar Shirzad, the policy chief at Coinbase, responded to Harris’ statements, describing them as a positive step for the crypto industry. While he acknowledged that Harris’ position was not as strong as Donald Trump’s, he praised her recognition of digital asset innovation as being important, placing it on equal footing with AI. Shirzad’s remarks reflect the broader anticipation within the industry regarding how the next administration might shape crypto policy.
Similarly, Alexander Grieve, a government affairs executive at venture firm Paradigm, also found Harris’ remarks encouraging. He expressed optimism on social media, suggesting that regardless of the election outcome, the next administration would likely be more supportive of crypto than the current one. Grieve’s sentiment was echoed by others in the industry who view Harris’ position as a step in the right direction.
However, there is still some skepticism about Harris’ emphasis on protecting consumers and investors. Jake Chervinsky, the legal chief of the crypto venture firm Variant, expressed concern that consumer protection could be used as a pretext for more restrictive regulations on the crypto industry. He, like others in the space, is eager to see detailed policy proposals to determine whether they would truly support innovation.
Crypto has emerged as a significant issue in the 2024 U.S. presidential campaign. Major U.S. crypto companies like Coinbase, Ripple, and Gemini have spent nearly $120 million to influence the upcoming elections, highlighting the importance of favorable policies for the industry. The political divide over crypto regulation is becoming increasingly prominent as the election nears.
Donald Trump, Harris’ Republican rival, has already made his support for the industry clear. He has launched several non-fungible token (NFT) collections and endorsed his family’s crypto platform. Trump has even promised to fire SEC Chair Gary Gensler, who has been a key figure in enforcing regulatory actions against major crypto firms. As the race tightens, Harris holds a slight lead over Trump in the polls, but the outcome remains uncertain.
ETHERIUM SURGES OVER THE PAST WEEK AS MARKET SENTIMENT IS ON THE RISE
Ethereum has seen a strong performance over the past week, surging by 18.7% between September 17 and 23. This growth surpassed Bitcoin’s 9.8% rise over the same period, signaling a robust demand for Ether (ETH). As a result, Ethereum’s price reached $2,650, with the ETH/BTC ratio increasing by 7.5% to a three-week high of 0.0424. This rise in ETH/BTC indicates that Ethereum is gaining strength relative to Bitcoin, suggesting that market sentiment is becoming more favorable toward Ether.
Investors’ growing interest in Ethereum is also reflected in positive inflows to U.S.-based spot Ethereum ETFs, totaling $5.2 million and $2.9 million on September 19 and 20. Despite this, Ethereum investment products continue to lag behind Bitcoin in overall inflows, with $29 million in outflows from Ethereum between September 16 and 20. Much of this is attributed to persistent outflows from Grayscale Trust, which has yet to be offset by inflows from newly launched Ethereum ETFs.
Bitcoin’s dominance in the crypto market has also been declining, dropping from 58.7% on September 19 to 57.4% on September 23, as altcoins like Ether gain more attention. This drop in Bitcoin’s market dominance signals a potential shift in investor preferences, with Ethereum emerging as a stronger contender in the crypto space. Investors are likely to continue reallocating capital toward Ether as its performance against Bitcoin improves.
One key indicator of Ethereum’s rising demand is the positive funding rate for Ether’s open interest. Since September 16, the funding rate has flipped positive, reaching 0.0072%. A positive funding rate typically signals a bullish sentiment, as traders are increasingly taking long positions on Ether. This suggests that investors are expecting further price appreciation, potentially fueling Ethereum’s next upward move.
Ethereum’s network activity further supports the case for higher demand. Decentralized applications (DApps) built on Ethereum have seen a 6.5% increase in the number of transactions over the last 24 hours. This increase is driven by popular DApps like Uniswap, Balancer, ParaSwap, and Aave, which have experienced higher usage. While the number of active wallets has slightly declined by 1.42%, the volume of DApp activity has grown significantly, with a 21.92% gain over the same period.
Additionally, Ethereum’s total value locked (TVL), which represents the amount of assets held within decentralized finance (DeFi) protocols, has increased from $44.1 billion to $49.65 billion between September 18 and 23. This growth in TVL reflects rising user interaction with Ethereum’s blockchain, further reinforcing the strong demand for Ether. The increase in TVL also indicates greater confidence in Ethereum’s DeFi ecosystem.
Overall, Ethereum’s recent price performance, coupled with its strengthening against Bitcoin, increased network activity, and higher demand for its DApps, suggests that a recovery toward the $3,000 level may be on the horizon. However, for ETH to maintain its current support level of $2,600, sustained network growth and further increases in user interaction will be crucial.
As investors continue to show interest in Ethereum’s ecosystem, particularly in DeFi and DApps, the outlook for Ether appears increasingly positive. If this momentum continues, Ethereum could be well-positioned to challenge higher price levels in the coming weeks, potentially reaching the $3,000 mark again.
CRYPTOCURRENCY REGULATION IN THE U.S. UNDER INTENSE SCRUTINY
The future of cryptocurrency regulation in the U.S. is under intense scrutiny as the industry faces criticism from key financial regulators. SEC chair Gary Gensler has labeled the crypto industry as rife with fraud, with many firms failing to comply with laws that protect investors. Gensler emphasizes that the global public has suffered significant financial losses due to such companies, and his agency is committed to enforcing rules established to safeguard investors. This regulatory battle coincides with a major political effort by the crypto industry, which has been pouring millions into political donations to influence the outcome of the November 2024 U.S. elections.
The November elections will not only determine the presidency but also influence the future of cryptocurrency laws, with all House seats and a third of the Senate also up for grabs. Donald Trump has positioned himself as a pro-crypto candidate, pledging to make the U.S. a global leader in cryptocurrency and promising initiatives like a national Bitcoin stockpile. This is a significant shift from his earlier skepticism when he labeled Bitcoin as a scam. In contrast, the Biden administration, with Kamala Harris as vice president, has taken a harder stance, cracking down on crypto firms for fraud and money laundering.
Recent high-profile cases have underscored the Biden administration’s tough approach. In 2023, Sam Bankman-Fried, founder of FTX, was jailed for 25 years for defrauding billions from customers. Binance’s Changpeng Zhao was also fined billions and jailed for allowing criminal activities on his platform. The SEC has been particularly aggressive, launching a record 46 enforcement actions against crypto firms last year. Gensler argues that despite crypto being a small part of the U.S. financial market, its potential to erode trust among everyday investors is significant.
While Trump’s stance on crypto is clear, Harris’ position is more ambiguous. Although she has not publicly spoken much about cryptocurrencies, her advisors have hinted at a willingness to support policies that foster the growth of emerging technologies. Harris’ team has also been engaging with crypto executives, sparking hope within the industry that regulation could be more favorable in the future, regardless of the election’s outcome. Leaders within the crypto space, like Coinbase’s legal chief Paul Grewal, stress the global importance of U.S. crypto policies and urge lawmakers not to lag behind the rest of the world.
The U.S. crackdown on cryptocurrencies mirrors similar actions in Europe. In April, the European Union passed laws to reduce the risk of crypto being used by criminals. However, other global regulators have been slower to act. The G20 has been working on minimum standards for crypto regulation, but these guidelines remain non-binding, and adoption has been slow. Meanwhile, in the U.S., a bill to regulate crypto has passed the House but faces hurdles in the Senate, with critics arguing that it might weaken consumer protections.
Amid this regulatory uncertainty, the crypto industry has ramped up its political spending, aiming to elect sympathetic lawmakers. As of August, the industry had spent an unprecedented $119 million on donations. According to the consumer advocacy group Public Citizen, the industry’s goal is to elect pro-crypto candidates and weaken oversight, regardless of party affiliation. They argue that the industry is leveraging its financial power to push for less regulation and fewer consumer protections.
The stakes in the November elections are high for the crypto industry, as the outcome could shape how the U.S. approaches cryptocurrency regulation. Trump’s pro-crypto rhetoric stands in contrast to the Biden administration’s stringent enforcement of laws, while Harris’ position remains unclear. Both sides are vying for votes, including those of crypto enthusiasts, as the industry continues to advocate for more favorable regulations and greater acceptance of digital assets in the U.S.