The weak global economic situation is still visible in the crypto market, but lately, crypto investors have finally received some long-awaited glimmers of hope for Bitcoin. DeFi, on the other hand, could be doing better.
- Bitcoin’s price increased by 28% in October
- The crypto world buzzes about Bitcoin ETFs
- DeFi in crisis mode – capital and users escaping
- FTX to return $9 billion to users next year
- Ferrari started accepting crypto payments in the US
Here are the most discussed topics of October.
Positive Bitcoin News
The last two years have been challenging for cryptos. However, Bitcoin has demonstrated resilience and shown why it is called digital gold.
Bitcoin has not only survived this year – its price has risen steadily throughout the year and by November has more than doubled from January lows. More than 40 million Bitcoin wallets are profitable, setting a new record.
A strong performance amid a bear market inspires confidence in investors and bodes well for next year.
The crypto world buzzes about Bitcoin ETFs
News about Bitcoin funds have acted as the most significant price driver in October and has given the crypto market a long-needed boost. American crypto investors have been waiting for Bitcoin-based ETFs for years, and the wait will likely be rewarded.
Gary Gensler said that the SEC has received 8-10 applications related to ETF funds. The filings started pouring in after the world’s largest crypto asset manager, Grayscale, recently won a lawsuit against the SEC. According to estimations, ETFs are likely to launch in early 2024.
Approval could lead to a massive wave of investment. According to the wildest estimates, up to $17.7 trillion of institutional capital could pour into Bitcoin ETF products. Naturally, this would have a huge impact on the entire cryptocurrency market and the reputation of cryptocurrencies.
Speculation is now running hot, and the hype seems to have returned to the crypto market, at least temporarily. The price of Bitcoin rose by more than 28% during October, and altcoins have naturally followed suit. For example, Solana rose more than 55% in October.
Key figures and price development of Bitcoin in October 2023. Source: CoinMarketCap.
The US government owns over $5 billion worth of Bitcoin
Exciting news from the other side of the Atlantic: the US government is now one of the world’s largest Bitcoin owners. Although it has sold some thousands of bitcoins this year, the American government still holds more than 200 thousand bitcoins, worth well over $5 billion. The estimate is based on three major US seizures related to the Bitfinex hack and Silk Road.
Crypto company 21.co estimates that the government is dealing with at least 194,188 bitcoins. This is based on publicly available reports, and the company states that these numbers are lower-limit estimates of the government’s holdings.
The company tracked Bitcoin movements in the government wallet. The US seized a significant amount of bitcoins from three incidents:
- Silk Road in November 2020 – 69,369 BTC
- The Bitfinex hack in January 2022 – 94,643 BTC
- The James Zhong seizure in March 2022 – 51,326 BTC
The news has raised confidence among investors towards cryptocurrencies.
Warren Buffet’s crypto stock has outperformed Apple and Amazon
News about Warren Buffett investing in crypto is just icing on the cake. Indirectly, sure, but we’ll take it.
The investment company of the “Oracle of Omaha,” Berkshire Hathaway, is heavily invested in the Brazilian digital bank Nubank. Apparently, that has accidentally driven Buffett into the crypto industry.
Nubank facilitates traditional banking services and allows its customers to trade with Bitcoin and other cryptocurrencies. This year, Nubank released its own altcoin, Nucoin. Nubank’s share has risen more than 100% during 2023, outperforming some huge names in Buffett’s portfolio, such as Amazon, Apple, Coca-Cola, and Bank of America.
Berkshire Hathaway invested $500 million in Nubank in an initial public offering in 2021. After the offering, the company invested another $250 million. The position’s value has already risen to 840 million dollars, meaning Buffett has reaped nice returns on his investment.
The global financial markets are in the eye of the storm, and ironically, Buffett, known for his strong anti-crypto stance, investing in a crypto-friendly bank has been one of his best decisions recently.
DeFi in the negative spotlight
While Bitcoin is going strong at the moment, the same cannot be said about DeFi.
DeFi, or decentralized finance, has faced challenges and setbacks recently and is fast becoming one of the biggest losers in the bear market.
DeFi is losing the race against traditional finance
When DeFi initially gained popularity during the infamous “DeFi Summer” in 2020, many believed it would revolutionize the entire financial industry. However, the bear cycle of the past years has knocked it off the course.
Just two years ago, DeFi services offered amazing annual returns of tens, even hundreds of percent. But now, the industry is losing the competition for the future of the financial sector. DeFi is now trying to keep up with traditional banks for the best returns.
While some traditional American banks offer more than a 5% annual return, those who invest in Ethereum’s DeFi platforms only get about a 3.3% return on their investment.
The situation is terrible for DeFi. The amount of capital locked up in the industry’s services has fallen to its lowest level since February 2021. Investors are pulling their assets out of DeFi in search of higher returns with lower risk.
The loss of capital isn’t DeFi’s only downfall – it has also lost a ton of users. The graph below tells more than a thousand words.
Monthly unique Decentralized Finance users from 2018 November to 2023 October. Source: Dune Analytics.
At its peak in 2021, DeFi had almost 8 million monthly active users. Now, the number of users has dropped to less than 1.5 million.
In other words, DeFi has lost its appeal for now. Unfortunately, the bad news does not end there.
DeFi heists are a huge stain on the reputation of cryptocurrencies
Although the amount of money hackers stole from DeFi services has decreased slightly compared to the previous year, the total amount is still absurd.
In 2022, crypto hacking reached an all-time high; a total of $3.5 billion was stolen in 284 attacks.
So far, in 2023, there have been 297 attacks on crypto services, and hackers have made off with $1.89 billion. In other words, an average of $289,000 is stolen from crypto services every hour.
These alarming numbers highlight the urgent need to improve security measures in the DeFi sector. Even the European Union’s market regulator ESMA has warned of serious risks for DeFi.
Not all hope is lost
Despite these challenges, DeFi is not dead and gone yet. The protocols are still working. The blockchain and smart contract technology behind DeFi has not failed.
In addition, Uniswap, the world’s largest decentralized exchange, has taken significant steps forward. In September, Uniswap announced its goal of raising $62 million in funding for ecosystem and infrastructure development.
Recently, Uniswap activated the “fee switch,” a feature that sparked a lot of discussion on social media during the year. Uniswap is Ethereum‘s largest application in terms of transaction fees and generates millions of dollars for investors every day. However, Uniswap was not making any profit because the “fee switch” had not been turned on.
Well, now it is. As of October 17, Uniswap started charging a swap fee of 0.15%. The reward only applies to certain altcoins but not to stablecoin exchanges or Ethereum. It is a big milestone for Uniswap towards a sustainable business model.
The FTX trial is moving forward
Do you still remember FTX?
Yeah, who could forget? FTX was one of the biggest topics of conversation in the crypto world last year. It was one of the most popular crypto exchanges in the world before it completely collapsed due to a scandal last fall. It will be exactly one year since the collapse on November 18.
However, the case of Sam Bankman Fried’s infamous exchange is not over yet. When FTX collapsed last November, few users believed they would ever see the funds they had deposited into the service again.
But believe it or not, FTX clients could receive more than $9 billion in compensation by mid-2024. It is more than 90% of all funds deposited into the service.
The deficit claim is estimated at approximately $8.9 billion for FTX.com and $166 million for FTX.US. If approved by the bankruptcy court, the funds will likely be disbursed by the end of the second quarter of next year.
So, if you had any funds in FTX, that means good news.
Mass adoption moves forward
Finally, we have good news regarding the global adoption of cryptocurrencies.
Ferrari’s decision to accept cryptocurrencies was due to market demand and retailer requests.
Unfortunately, for now, crypto payments are only accepted in stores in the United States. But don’t worry: Ferrari plans to accept crypto payments in Europe as well. Waiting for the next bull market!
Cryptocurrencies have 420 million users globally
Triple-A, a company focused on crypto payments, estimates cryptocurrencies already have 420 million users worldwide. The largest market is the United States, with 46 million users, followed by India with 27 million users, and Pakistan in third place with 26 million users. There are an estimated 31 million cryptocurrency users in Europe.
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