Daily Market Update: January 22, 2024

January 22, 2024

BTC is currently trading around $40,600 and ETH around $2,350. Notable gainers in the last 24 hours are SC, FXS, and LEO. The global crypto market cap is ~$1.67T, down 3.1% over the last day. DeFi Total Value Locked is ~$57b and BTC dominance is around 51%.

Equities and bonds are trending higher while crypto’s downward slide continues. Interest rate decisions from the BoC and ECB are two of the week’s most notable economic events, in addition to Core PCE on Friday. It’s also another big week for earnings, headlined by reports from J&J, P&G, Netflix, Tesla, Visa, and many others.

Turning to crypto specific news, yesterday sparked a renewed focus on Ethereum’s client diversity after a Nethermind consensus bug caused the ~10% of Ethereum validators running Nethermind’s execution layer (EL) client to diverge from the network. The bug was found and patched within hours on Sunday, and validators running Nethermind only suffered a few dollars of losses as a result, but the modest impact directly stemmed from Nethermind’s minority usage. Large staking providers like Coinbase, Lido, and Binance are over indexed to running Geth, which is the supermajority EL client, and a similar bug in Geth would’ve posed a cataclysmic tail risk for Ethereum (i.e., Geth users could’ve essentially lost all of their ETH if a similar event impacted the supermajority client.). Check out our previous coverage of client diversity or see Ethereum developer Dankrad Feist’s overview of the worst case scenario here (scenario 3). The short takeaway is that Ethereum staking is not risk free, and one can substantially reduce their risk by staking with minority clients (i.e., it’s best to avoid Geth, as well as Prysm and Lighthouse to a lesser extent).

Notable news includes: MetaMask introduced an Ethereum validator staking feature powered by ConsenSys; a Bloomberg litigation analyst estimated there’s a 70% chance that Coinbase prevails over the SEC in the agency’s lawsuit against the crypto exchange; the SEC acknowledged a proposed rule change enabling the Nasdaq to list and trade options on BlackRock’s Bitcoin ETF, setting up the potential for options to begin trading in a month or two; Solana stablecoin volumes have already breached its monthly record just ~2/3rds of the way through January; Terraform Labs filed for Chapter 11 Bankruptcy in Delaware; and, a Colorado pastor and his wife had their assets frozen by a state judge after making millions on a crypto that they claim was made on “God’s instruction.”

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Matt Kunke, Research Analyst | TwitterTelegramLinkedIn
Brian Rudick, Senior Strategist | TwitterTelegramLinkedIn

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