For crypto markets, it is the best of times and the worst of times. Yesterday the world’s largest crypto exchange Binance pleaded guilty to criminal charges and will pay a record $4.3 billion fine to the U.S. Department of Justice and the CFTC. Its billionaire founder Changpeng Zhao agreed to step down as CEO. ”Using new technology to break the law does not make you a disruptor. It makes you a criminal,” warned United States attorney general Merrick Garland. At the same time, crypto’s flagship currency, bitcoin, is up 120% in 2023 and the entire crypto market capitalization has recovered more than $800 billion since the collapse of the crypto exchange FTX and arrest of its now-convicted founder Sam Bankman-Fried.
Investors brave enough to speculate in crypto markets are understandably concerned over its future. Is the sector’s long winter finally over? Or are more dark days ahead as the regulatory crackdown continues? Rather than attempt to make a broad crypto market call, Forbes decided to weigh in on five bellwether cryptos.
The original crypto asset has been waiting more than ten years for the Securities and Exchange Commission (SEC) to allow it to trade under an ETF wrapper. More than 30 applications have been filed and then either rejected or withdrawn, with the SEC arguing each time that the underlying market for bitcoin is too prone to fraud and manipulation. Bitcoin futures ETFs like Proshares Bitcoin Strategy ETF, which are regulated by the CFTC, have been around since October 2021. The good news is that SEC approval for a spot bitcoin ETF may finally be coming as soon as January. More than a dozen asset managers, including industry leader BlackRockBLK+0.5%, have recent applications pending for spot bitcoin funds, effectively putting their reputations behind the asset. The introduction of bitcoin ETFs to the market will likely generate a wave of bitcoin demand from mainstream investors.
“Major developments for bitcoin in the past like the Bitcoin futures launch in 2021, or the Coinbase direct listing were ‘buy the rumor, sell the news’ events”, says Cosmo Jiang, portfolio manager at Pantera Capital, a blockchain investment firm in Menlo Park, California. “But this time could be meaningfully different. A spot ETF would be a demand driver. It’s gonna be very powerful.”
Adding bullish momentum is anticipation of bitcoin’s fourth halving in April. The halving is an automated event hardcoded into the bitcoin network. It occurs about every four years (specifically, every time 210,000 blocks are added to the bitcoin chain). It halves the reward rate for adding blocks, now 6.25 bitcoin. At the current bitcoin price, that means the per block reward will fall to approximately $117,000 from $234,000, based on current bitcoin prices. These reductions are set to happen every four years until the final bitcoin is mined in 2140, setting the final outstanding supply to 21 million. Combine the automated supply slowdown from the upcoming halving with a potential surge in demand from spot ETF issuance and you have a very bullish environment for bitcoin.
Unlike the Bitcoin blockchain, which is narrowly focused on being a payments network, No. 2 chain EthereumETH0.0%, fashions itself as a multipurpose worldwide computer that can run decentralized applications that mimic programs such as Dropbox, Facebook and UberUBER0.0%. Its token, ether, has the second-biggest market capitalization, $232 billion to bitcoin’s $699 billion. Given its broader potential uses, ether has long been touted by crypto bulls. During the initial coin offering (ICO) boom in 2017 when hundreds of projects raised billions of dollars in pseudo IPOs around the world, often for projects with little more substance than a white paper, ether rose six times as much as bitcoin. Then, during the pandemic driven run from 2020-2021, ether almost tripled bitcoin’s rate.
This year is a different story. While bitcoin is up 120%, ether has advanced only 65%. There are a few reasons why. First, unlike previous recoveries this one is centered mostly around bitcoin as the only reliable safe haven in crypto. Many investors are skittish about other cryptos, virtually all of which–ether included–remains in a state of regulatory ambiguity in the U.S.. Those issues may not be solved until Congress provides guidance to define whether tokens such as ether, solana, and hundreds of others are securities subject to SEC jurisdiction or commodities under Commodity Futures Trading Commission (CFTC) oversight.
It has also been a little more than a year since ether completed a major upgrade that changed the way it processes transactions to make it more efficient while reducing its power requirements, making it more environmentally friendly than bitcoin. Despite the structural overhaul, growth in key metrics such as transactions per second and active users remain disappointing.
One of the biggest casualties of the collapse of FTX a year ago was sol, the native token of the SolanaSOL 0.0% blockchain. Solana is considered to be a competitor to Ethereum. FTX invested heavily in the digital asset, accumulating a stash of approximately 65 million sols that was worth $2 billion a year ago, right before Sam Bankman-Fried’s high-flying empire crashed and burned. By the end of the 2022, SBF’s holdings plummeted to $650 million in value as the sol price crumbled to under $10, from its November 2021 record of $259.96, according to CoinGecko.
“Think of me basically as a fanboy, speaking of its technology, in particular,” Bankman-Fried told Forbes in 2021. His view was that major technology companies are going to need the ability to process “100,000 to 10 million” internal transactions each second. Solana is “one of the very few blockchains” that “have a roadmap to that” kind of power, he added. Ethereum, by contrast, processes less than 15 transactions a second, though layer-2 blockchains, which can supplement the throughput, bring it closer to 30. Solana already processes 4,000 transactions per second and has the theoretical capability of reaching 50,000.
After the FTX collapse, sol was seen by traders as mired in SBF’s gravitational field, but the stigma appears to be gone. The token is up a staggering 313% this year, reaching $53, with much of the gain in the past month.
Binance’s CEO Changpeng Zhao built his global exchange with the help of a loyalty token called BNBBNB 0.0%, which reached a peak value of $100 billion in 2021. Sam Bankman-Fried created something similar for his exchange called FTT. Such tokens are common in crypto. They trade like stocks, but offer holders no ownership rights in the underlying companies.
With the news that Binance founder CZ has pled guilty to criminal charges, agreed to pay over $4 billion in fines and to step down from his role as CEO, investors are dumping BNB. It’s already down more than 12% in the last day or so. This does not necessarily mean that BNB is headed to zero. Bankrupt FTX’s loyalty token, FTT still has a market value of over $1 billion despite the exchange not operating in over a year. As of this writing, BNB token still has an unbelievable market capitalization of $35 billion. A lot of BNB’s value is derived from its utility as a discounting mechanism for traders on the exchange and its status as the native token needed to interact within Binance’s proprietary blockchain ecosystem known as BNB Smart Chain. BNB’s value could come into question if traders abandon Binance exchange en masse and its sister blockchain.
The non-fungible token (NFTNFT0.0%) market has cooled considerably in the last year, but one big winner has been BlurBLUR+4%. The art marketplace targets NFT traders and in the last year it has gobbled up market share from former leader OpenSea, rewarding customers with its native token BLUR. It is now the largest marketplace for collections based on the Ethereum blockchain, where most NFTs reside. BLUR rewards users based on their trading volume and gives them votes as to the governance of the platform. It can also be used to pay royalties to art creators and pay so-called “gas” fees, which are necessary for minting blockchain art. The token officially launched in the middle of February, debuting at 65 cents. It peaked at $1.24 on February 18.
The system works like this: Traders earn Blur points for using the NFT marketplace’s array of products, including buying, selling, bidding, lending through its peer-to-peer protocol Blend, and using a buy-now-pay-later feature. The more Blur points you accumulate each season (usually six-month periods), the higher the amount of BLUR tokens you are rewarded. These rewards are delivered via airdrop.
Now on its second airdrop, where a total of 660 million BLURs have been released, the token’s growth has slowed. BLUR tokens trade for 47 cents currently and have a market capitalization of nearly $400 million.
While it has been a bleak year for NFT trading (NFT trading volume fell 82% between February and October) business may be rebounding. November is already tracking to be a better month for the blockchain-based digital images and bit brands like Disney, NikeNKE -0.1% and the National Hockey League are still creating NFT and incorporating them in their strategic plans. Among NFT platforms BLUR is a viable way to play a market rebound however a big risk lies in unexpected airdrops which can flood the market with tokens. Buyer beware.
Original source: https://www.forbes.com/sites/mariagraciasantillanalinares/2023/11/27/bad-bunny-nos-lleva-al-encuentro-de-su-imperio-del-deporte-la-moda-y-del-entretenimiento/?sh=6e7482a356d1