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↘️Weekly Recap: Cryptocurrencies Pull Back Despite Fed and ETF Bullishness

The Defiant

Weekly Recap

Happy weekend Defiers!

It was a volatile week for cryptocurrency, with many top web3 assets retreating from their recently-posted year-to-date highs.

The week began with a three-day sell-off as investors took profits gleaned from the recent rally. Traders sent $2B worth of BTC to centralized exchanges — the largest in-flow to CEXes since the market turmoil surrounding the collapse of Terra in mid-2022.

While digital assets bounced back as mainstream markets rallied following the U.S. Federal Reserve leaving interest rates steady and tipping cuts for 2024, the combined crypto capitalization is down 2% from last week's high.

The market retracement came in spite of the U.S. Securities and Exchange Commission (SEC) confirming a fresh round of meetings with spot Bitcoin ETF hopefuls.

Several applicants updated their filings this past week, with Valkyrie, Invesco, Galaxy Digital, and Bitwise now making plans to exclusively support fiat-based “in-cash” share redemptions at launch if approved. The filings suggest the SEC is steadfast in its preference for in-cash delivery, despite BTC-based “in-kind” redemptions offering tax and other efficiency benefits to investors.

On-chain activity across the broader Ethereum ecosystem is booming. The recent uptick in Ethereum’s burn rate erased the supply inflation generated during the lull in September and October, with ETH’s supply tagging new post-merge lows. Booming activity on Linea amid its Voyage campaign has helped to propel Layer 2 adoption to new all-time highs, with L2 throughput, active users, and total value locked posting new records.

Ethereum users continue to be courted by companies and protocols incentivizing adoption with “points,” with Rainbow Wallet promising to reward early users and launching a vampire attack targeting MetaMask.

However, DeFi users were warned not to interact with dApps on Thursday after the connector library for Ledger, which facilitates connections between web3 wallets and decentralized applications, was compromised with malicious code. The vulnerability was short-lived, with victims losing just $480,000 before Ledger patched the exploit.

Donald Trump launched his third NFT collection, “Mugshots,” with tokens comprising artwork poking fun at the former-president’s ongoing legal battles. While Trump promised to ship pieces of the suit he was wearing while arrested to a handful of buyers, the floor price for many of Trump’s previous NFTs have tumbled significantly.

Bitcoin continues to attract years-old tech from Ethereum, with GFX Labs announcing plans to launch Uniswap v3 on the Bitcoin sidechain, Rootstock. The news comes as the Bitcoin network grapples with congestion caused by inscription-based fungible and non-fungible tokens.

The popular cross-chain messaging protocol, LayerZero, deployed its newly-announced v2 iteration on testnets across more than 40 blockchains. The revamped protocol aims to bolster decentralization and throughput.

Synthetix, the veteran DeFi protocol that pioneered yield farming in 2019, is revamping its tokenomics to do away with inflation. Stakers now exclusively receive trading fees as rewards, and can also access interest-free loans from the protocol.

Plus, Senator Elizabeth Warren’s latest attack aimed at the crypto industry has garnered support from a handful of senators. The Digital Asset Anti-Money Laundering Act seeks to impose KYC requirements on non-custodial wallet users, validators, and other web3 users.

And in this week’s podcast, Cami Russo spoke with Will Warren, the co-founder of 0x and Matcha, to learn about Matcha’s new cross-chain swap functionality. The Defiant founder also gives a quick recap of the week and shared her hot take on points in this week's Crypto With Cami.

Enjoy!

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