7 December

“While bitcoin tanked last week, pulling the broader crypto market lower, there was one bright spot. The ether-bitcoin (ETH/BTC) ratio rose 13%, reaching a 3 1/2-year high and registering its best weekly performance since May.

The move was unique. Historically the pair has rallied during market-wide bull runs characterized by buying frenzy in ETH and other alternative cryptocurrencies. Several factors appear to have helped ETH/BTC chalk out gains in a risk-off environment:

1. Bitcoin exposure to macro risks – Increased institutional participation in bitcoin has perhaps made the biggest cryptocurrency more sensitive to adverse macro developments.

2. EIP-1559 and ETH 2.0 – According to analysts, ether’s newfound deflationary asset credentials and impending transition to the proof-of-stake mechanism, dubbed ETH 2.0, may have helped the cryptocurrency stay relatively resilient.

One of bitcoin’s main value propositions over ETH has been its monetary policy. However, after the London upgrade (and specifically EIP-1559), many perceive ETH as having a sounder monetary policy.

EIP-1559 has tied the amount of ether burned to actual network usage. The market is [also] excited about the Ethereum mainnet’s “merge” with the beacon chain proof-of-stake system scheduled for next year. Ether issuance is expected to drop 90% following the merge as it will no longer be distributed to miners.

3. Bitcoin’s declining role as a funding currency – Stablecoins have to a large extent taken over bitcoin’s role of being a base currency for other cryptocurrencies. In other words, stablecoins like tether with values pegged 1:1 to the U.S. dollar are now used to fund alternative cryptocurrency (altcoin) purchases. That’s a change compared with pre-2020, when bitcoin served as a gateway to altcoins. So, the unwinding of long altcoin trades now puts a bid under stablecoins. Previously, it would bring demand for bitcoin, helping the cryptocurrency outperform other coins.

While it may be too early to call ether the crypto market’s new haven, the token powering Ethereum’s blockchain may continue to outperform bitcoin as the focus remains on macroeconomic factors. Technical charts indicate that the path of least resistance for the ETH/BTC ratio is higher.

From a fundamental standpoint, Ethereum has DeFi, NFTs and metaverse going strong for itself. From a behavioral standpoint, NEW money has started to flow into ether from bitcoin.”

“FTSE Russell, the company behind the benchmark index of the U.K. stock market, is planning the development of a crypto index containing 43 digital assets. The index will “sit alongside” the FTSE 100 and Russell 2000.

The news represents a welcomed endorsement for cryptocurrencies from the U.K.’s mainstream financial world.

This was clearly becoming a market that people wanted data around.”

See Also: Coinbase launches open-source cryptography library Kryptology

Similar to the micro bitcoin futures launched in May, micro ether futures are 1/10 of one ETH. The exchange is looking to offer investors an efficient means of hedging their ether exposure.

The launch of micro ether futures underscores the significant growth and liquidity we have seen in our cryptocurrency futures and options.”

See Also: 1inch Now Available in LedgerLive

Decentralized finance (DeFi) has a centralization problem and policy makers should use it to regulate the sector, the Bank for International Settlements (BIS) said in its latest quarterly review. DeFi has an “inescapable need” for centralized governance, the report says.

DeFi’s inherent governance structures are the natural entry points for public policy. This element of centralization can serve as the basis for recognizing DeFi platforms as legal entities similar to corporations.

According to the report, the tendency for blockchain consensus mechanisms to concentrate power also makes it easy for a small number of stakeholders to make big decisions.”

See Also: OCC Highlights Digital Assets in Risk Report for Banks
See Also: Major Indian bank breaks ‘banking ban’ with WazirX crypto exchange deal

The country is reportedly moving to introduce legislation in 2022 to limit the issuance of stablecoins to banks and wire transfer companies. The FSA’s move mirrors similar proposals in the United States, to treat stablecoin issuers like banks.

According to the report, the legislation will also include steps to prevent money laundering via stablecoins by giving the agency additional oversight over intermediaries such as wallet providers, and also adding additional know-your-customer (KYC) measures.

In January, a consortium of over 70 major Japanese corporations, including Mitsubishi, are expected to begin trialing a central bank digital currency (CBDC), the digital yen, that they say will work like bank deposits.”

Over the past week, the demand for digital land outpaced all other items, art and collections. According to DappRadar, $106 million worth of metaverse land was sold among more than 6,000 traders in the week ending on Thursday.

Undoubtedly, Metaverse land is the next big hit in the NFT space. Outputting record sales numbers and constantly increasing NFT prices, virtual worlds are the new top commodity in the crypto space.”

See Also: A16z Leads $36M Bet on Web 3 Startup From Facebook Crypto Vets

Checking in on Bitcoin’s Lightning Network

A federal jury found that Craig Wright, the Australian who claims to have invented Bitcoin, didn’t have a business partnership with deceased Florida computer forensics expert Dave Kleiman, but he does owe $100 million in compensatory damages for conversion to a company Kleiman founded in Florida, W&K Info Defense Research.

We are immensely gratified that our client, W&K Information Defense Research LLC, has won $100,000,000 reflecting that Craig Wright wrongfully took bitcoin-related assets from W&K.

Wright told CoinDesk last week that Ira Kleiman would have trouble collecting any verdict awarded to W&K, as his ex-wife and an entity tied to him own two-thirds of the company – a matter that is being litigated in court in Palm Beach County.

BSV, the offshoot of bitcoin Craig Wright is involved in, rallied as much as 13% Monday following the resolution of the Kleiman case.”