The Hong Kong Securities and Futures Commission (SFC) has been inundated with crypto license applications, totaling 18 from various local and global players over a span of two months.
Among the applicants are prominent names like Huobi HK, Crypto.com, OKX, Bybit, and DFX Labs.
To meet the stringent licensing requirements, applicants must undergo thorough due diligence checks, including comprehensive financial audits, which can be a costly endeavor.
It’s reported that Web3 firms are spending up to $25 million to ensure compliance and build robust applications for these licenses.
The clarity provided by Hong Kong’s regulatory framework regarding exchange licensing has not only attracted crypto exchanges but also traditional brokerages like Tiger Brokers.
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Tiger Brokers recently expanded its SFC license to incorporate crypto trading, acknowledging the growing significance of cryptocurrencies as an asset class and leveraging its fintech expertise to integrate Web3 technology.
Additionally, Harvest Hong Kong, a major Chinese fund manager, submitted the first application for a spot Bitcoin exchange-traded fund (ETF) on Jan. 26, marking a significant development in Hong Kong’s crypto landscape.
In terms of security measures, Hong Kong has imposed a minimum insurance requirement of 50% for licensed crypto exchanges to safeguard customers’ assets.
Notably, OSL Exchange has taken steps to exceed this requirement by partnering with Canopius, a Lloyd’s of London underwriter syndicate, to secure an insurance policy covering 95% of its users’ assets over a two-year period.
This underscores the increasing focus on security and risk mitigation within the crypto industry.
Bitcoin (BTC) soared to a fresh 2024 peak of £53,019 on February 20, only to sharply decline to £50,000 on select exchanges.
Traders attribute consistent inflows of spot BTC ETFs and the forthcoming supply halving event as pivotal drivers behind this surge, with BTC currently trading above £52,100 at the time of writing.
Let’s delve into the primary factors underpinning today’s volatility in the Bitcoin price.
Bitcoin futures’ open interest (OI) has surged to a new yearly pinnacle, reminiscent of levels last witnessed in November 2021.
This surge suggests heightened trading activity surrounding the foremost cryptocurrency by market capitalisation.
Data from cryptocurrency futures trading and information platform Coinglass reveals that total OI for BTC futures reached £22.69 billion on February 20, the highest since November 11, 2021, closely approaching the peak of £23 billion recorded at that time.
Bitcoin futures OI surged by over 30% in 2023, correlating with Bitcoin’s 23% year-to-date surge to £53,000, reaching levels last observed in December 2021.
Open interest serves as a gauge of the overall value of all unsettled Bitcoin futures contracts across exchanges, with an uptick indicating increased market activity and trader sentiment surrounding the pioneering cryptocurrency.
Investor sentiment remains buoyant, buoyed by rising inflows to spot BTC ETFs despite outflows from gold ETFs on the rise.
Bitcoin has surpassed the £49,000 peak reached subsequent to the January 10 approval of spot Bitcoin ETFs by the U.S. Securities and Exchange Commission.
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Data from Farside Investors reveals that £4.91 billion has flooded into Bitcoin ETFs within six weeks since trading commenced on January 11.
The total weekly inflows into the newly issued spot Bitcoin ETFs reached £2.5 billion last week, as per CoinShares Digital Asset Fund Flows Weekly Report.
CoinShares analyst James Butterfill remarked, “These inflows, alongside recent positive price movements, have propelled total assets under management (AuM) to £67 billion, marking the highest level since December 2021.”
On February 17, financial commentator Tedtalks Macro underscored the steady rise in net inflow to spot Bitcoin ETFs, averaging £182 million per day, asserting,
“Post-halving we only need ~£25M of net inflows to spot ETFs per day, to offset the miner production.”
The impending Bitcoin halving, anticipated to slash miners’ rewards by 50%, is also projected to significantly stoke investors’ interest in BTC.
Historically, the halving event has preceded Bitcoin embarking on a parabolic uptrend in the months post-event.
Starknet, the Ethereum layer-2 scaling protocol, commenced the distribution of its native network token on 20th February, with millions of tokens claimed upon the launch of the provisions portal.
Real-time data monitoring the claims indicated that eligible users had acquired more than 45 million STRK tokens within the initial 90 minutes of the allocation.
The token began trading on several major exchanges.
STRK was traded at over £5 following its listing on Binance and exceeded £3 on KuCoin as the tokens permeated the broader cryptocurrency ecosystem.
CoinMarketCap data revealed STRK trading between £3 and £4, with its market capitalisation valued at over £2.1 billion.
More than 1.3 million wallets are eligible to claim Starknet’s native token, including those of Ethereum solo and liquid stakers, Starknet developers and users, as well as projects and developers from outside the Web3 ecosystem.
The Starknet Foundation has released an overview of its token provision alongside the launch of a dedicated portal that enables individuals to verify their eligibility and acquire STRK tokens.
Over 700 million STRK tokens are poised to be allocated across nine categories and will be utilised for governance and transaction fees. Starknet intends to introduce staking of STRK tokens in the future.
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Starknet is among Ethereum’s principal L2s that pioneered zero-knowledge (ZK) rollup technology.
The protocol facilitates the processing of transactions and smart contract functions off-chain, with cryptographic proofs submitted to Ethereum to access the security guarantees of its underlying blockchain.
The layer-2 scaling protocol has also addressed concerns raised by Starknet and Ethereum community members regarding the eligibility criteria for the STRK airdrop.
Starknet’s active users surged in recent weeks as prospective STRK recipients and airdrop farmers sought eligibility for the campaign.
A statement from Starknet subsequent to the launch of the provisions portal acknowledged feedback from community members and network users who felt “overlooked due to certain Provisions criteria.”
The Starknet Foundation affirmed that it was working on a resolution for users who were not deemed eligible.
The broader cryptocurrency ecosystem has also been cautioned to remain vigilant against scams and malicious links.
Bitcoin holdings on the Coinbase crypto exchange have dwindled to their lowest point in nine years as users relocate a substantial portion of their holdings away from the exchange.
According to a report from CryptoQuant, whales shifted 18,000 Bitcoin, valued at nearly $1 billion, away from Coinbase over the weekend, with transfer amounts ranging from $45 million to $171 million.
The public order book of Coinbase presently contains approximately 394,000 BTC, estimated to be valued at $20.5 billion.
The movement of BTC holdings away from centralised exchanges by whales is viewed as a positive indicator as it reduces the availability of Bitcoin for sale.
Nonetheless, opinions on social media regarding the nature of these transfers are mixed.
Some speculate that the funds are being transferred to custodial wallets in anticipation of a price surge, particularly with the forthcoming Bitcoin halving just two months away, causing a supply shock.
Conversely, some believe that the transferred funds might be utilised for liquidity in over-the-counter (OTC) trades.
Others suggest that the funds might be transferred to a different custodian and that these are not individual withdrawals, remarking that the majority of assets held on these exchanges do not actually belong to them, thus the actual withdrawal figure should be much lower.
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With each Bitcoin halving cycle, the influx of new BTC into the market is halved, leading to a supply squeeze as demand rises.
The next Bitcoin halving is scheduled for April at a block height of 740,000, reducing the block reward from 6.25 BTC to 3.125 BTC per mined block.
This halving coincides with significant institutional demand, evidenced by the approval of 11 spot Bitcoin exchange-traded funds (ETFs) in the United States in January.
Presently, approximately 900 BTC are mined daily, while the daily net inflows of Bitcoin ETFs amount to around half a billion dollars, equivalent to about 9,650 BTC, notwithstanding Grayscale registering nearly $100 million in daily outflows.
Following the April halving, the daily production of BTC will decrease to about 450 BTC, while institutional demand is expected to persist.
This significant disparity between supply and demand historically favours a bullish trajectory for the Bitcoin price, often resulting in new all-time highs within a year of the halving.
Bitcoin is currently trading at around $52,000, marking its highest level since December 2021, albeit a 25% decrease from its peak of approximately $69,000.
Ether’s price breached the £3,000 mark on February 20th for the first time since April 2022.
From a value of £2,881 on February 19th, Ether surged over 4% in the past 24 hours and 74% over the last year, reaching a year-to-date peak at £3,000.97 on Binance at 13:45 UTC, as per CoinMarketCap data.
The surge in Ether’s price coincides with anticipation surrounding the potential approval of a spot Ether exchange-traded fund (ETF) by the United States Securities and Exchange Commission (SEC) and the upcoming implementation of Ethereum Improvement Proposal (EIP) 4844 through the Dencun upgrade.
According to current odds from Polymarket, there’s a 45% likelihood of the SEC approving a spot Ether ETF by May 31st.
Bernstein, a wealth management firm, recently suggested that ETH might be the only other cryptocurrency to secure an ETF spot in the United States.
“Ethereum with its staking yield dynamics, environmentally friendly design, and institutional utility to build new financial markets, is well positioned for mainstream institutional adoption,” analysts Gautam Chhugani and Mahika Sapra reportedly wrote in a note on Feb. 19.
Meanwhile, Bloomberg’s Eric Balchunas forecasts a 70% chance of approval, suggesting a positive outlook for Ether ETFs amid regulatory delays.
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The last time Ether exceeded £3,000 was almost 22 months ago, on May 4, 2022, when it hit a high of £2,966 before entering a prolonged bear market that saw its price plummet to £883 in June 2022.
ETH’s recent surge may also be linked to the much-anticipated Dencun upgrade of the network.
The Dencun upgrade, scheduled for March 13, is expected to incorporate several EIPs, including EIP-4844, which introduces proto-danksharding.
This upgrade streamlines the transaction process by storing some data off the blockchain, thereby accelerating transactions and reducing costs.
Data from CoinGlass indicates a growing open interest (OI) in Ether futures markets, reaching a record £10.19 billion, affirming the current volatility in ETH’s price.
Many market participants anticipate the recent bullish momentum to persist amidst any developments regarding the approval of a spot Ether ETF and potential movements in the broader cryptocurrency market.
Zap Protocol stands as a notable endeavor within the blockchain and cryptocurrency landscape, aiming to foster innovation and accessibility in decentralized finance (DeFi) and beyond. Its ambition is to streamline the integration and utilization of smart contracts and decentralized applications (dApps) across various industries by providing an open platform for the creation and deployment of oracle services.
These services are vital for dApps to interact seamlessly with real-world data and external systems, bridging the gap between blockchain technology and practical, real-world applications.
Overview of Zap Protocol
Zap Protocol offers a multifaceted infrastructure designed to enhance the functionality and interoperability of smart contracts by enabling them to securely and efficiently access a wide range of external data sources and APIs. This is achieved through the use of oracles, which are entities that fetch and verify external data for smart contracts. In the context of Zap Protocol, these oracles are decentralized, thus ensuring that the data they provide is reliable, tamper-proof, and transparent.
The protocol leverages the power of blockchain technology to create a decentralized marketplace for data feeds and other services that can be used by smart contracts. This marketplace allows data providers to list their services, which can range from financial data, weather information, to various other types of external data. Smart contract developers can then easily access and integrate these services into their applications, enabling them to create more complex, responsive, and useful dApps.
Key Features and Benefits
- Decentralization: By operating on a decentralized network, Zap Protocol ensures that the data provided by oracles is not controlled by any single entity, which significantly reduces the risk of manipulation and increases trust in the data used by smart contracts.
- Flexibility: The protocol supports a wide range of data types and sources, making it a versatile tool for developers looking to create dApps for various industries and purposes.
- Security: The use of blockchain technology ensures that all transactions and data exchanges on the Zap Protocol are secure and immutable, providing a reliable foundation for the development of dApps.
- Tokenization: Zap Protocol introduces its native token, ZAP, which is used within the ecosystem for transactions, staking, and governance. This tokenization aspect facilitates a self-sustaining economy where users are incentivized to participate and contribute to the network.
Use Cases
The applications of Zap Protocol are vast and diverse, reflecting its potential to revolutionize how dApps interact with the real world. Some notable use cases include:
- Finance: Integration of real-time financial data into DeFi platforms for accurate and decentralized financial services.
- Insurance: Automated, blockchain-based insurance policies that trigger payments based on verifiable, real-world data.
- Supply Chain Management: Transparent tracking of goods as they move through the supply chain, with data integrity ensured by decentralized oracles.
- Gaming: Creation of dynamic, data-driven gaming experiences that can respond to real-world events and data.
The ZAP Token
The ZAP token is central to the functioning of the Zap Protocol ecosystem. It serves multiple purposes, including paying for data feeds, staking to participate in the governance of the protocol, and incentivizing data providers and users to maintain and enhance the network’s value and security.
Where to Buy ZAP Tokens
ZAP tokens can be purchased on several cryptocurrency exchanges, both centralized and decentralized. Availability can vary based on the region and the regulatory environment, so it’s essential to check the most current listings. Some of the platforms where ZAP tokens might be available include:
- Centralized Exchanges (CEXs): ZAP is listed for live trading on numerous CEXs, including Poloniex and Bitrue.
- Decentralized Exchanges (DEXs): For those preferring a more decentralized approach, platforms such as Uniswap, SushiSwap, and 1inch offer the ability to trade ZAP tokens directly from a cryptocurrency wallet without the need for an intermediary.
- Crypto Wallets: Some crypto wallets offer integrated services that allow users to buy tokens like ZAP directly within the wallet interface. This option combines convenience with the security of not having to transfer tokens between a wallet and an exchange.
- P2P Platforms: Peer-to-peer platforms might also offer ZAP tokens for trade, allowing for direct transactions between individuals without the need for a centralized platform.
Bitcoin re-entered the spotlight within an intraday trading span by the close of the week on February 18th, with bullish trends gaining ground during weekend trades.
Data sourced from Cointelegraph Markets Pro and TradingView revealed that at $52,000, Bitcoin’s price consolidation reached a pivotal juncture.
The primary cryptocurrency experienced a downturn to $50,680 on Bitstamp a day earlier, marking its lowest levels in several days.
However, a swift recovery ensued, adding nearly $1,500 within hours. As of the time of writing, there hadn’t been a fresh retesting of these lows.
Analysing the week’s developments, prominent trader Skew observed a shift in trader behaviour during the latter half of the Wall Street trading week.
He noted a decline in spot buying towards the weekend, with “mostly taker driven dips & bounces since.”
“So far seeing some spot buyers return here with binance spot leading,” he remarked on the day.
Simultaneously, burgeoning open interest (OI) on CME Group’s Bitcoin futures markets, reaching a record $6.8 billion, hinted at impending volatility, according to data from monitoring resource CoinGlass.
However, discussing open interest more broadly, popular trader Daan Crypto Trades highlighted a discrepancy when denominated in BTC.
“This +100% rally from October has been healthy in terms of leverage imo,” he argued.
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“Funding has mostly kept it’s neutral rate and open interest denominated in $BTC is lower. In USD value of course it has gone up during this time as the underlying asset (BTC) went up in value.”
Skew further emphasised that bulls must maintain upward momentum in Bitcoin’s relative strength index (RSI) on 4-hour timeframes by the weekly close.
The 21-period exponential moving average (EMA), currently positioned at $51,500, also carried significance.
“In terms of spot flows around $52K – $53K area, notable spot selling into bounces which is often the case with profit taking,” he explained about the landscape on Binance.
“Key from here with current uptrend is seeing sufficient spot demand on dips, mostly seen as absorption at the lows where limit buying outweighs taker selling.”
Fellow trader and analyst Matthew Hyland highlighted $49,000 as the critical threshold to defend for the close.
Ethereum solo stakers and network nodes are poised to reap rewards from the incorporation of Verkle trees, as stated by Vitalik Buterin.
The Ethereum co-founder extolled the advantages of this technological enhancement to Ethereum’s protocol in a recent post.
Verkle trees are expected to facilitate “stateless validator clients,” with Buterin highlighting their capability to enable staking nodes to operate with “near-zero hard disk space and sync almost instantly.”
Buterin had previously outlined a five-stage, incremental process aimed at steering the smart contract blockchain towards what he termed as the endgame of Ethereum’s development.
This came subsequent to the eagerly awaited activation of the Beacon Chain, which marked Ethereum’s transition to proof-of-stake consensus in September 2022.
Verkle trees constitute a component of the roadmap, as shared by Buterin in late 2022.
Five keywords encapsulated the successive development phases: The Merge, Surge, Verge, Purge, and Splurge delineate the technical intricacies of various developmental milestones.
Verkle trees fall under the Verge category, representing the third phase of Ethereum’s developmental trajectory.
This phase involves the introduction of Verkle trees, which are set to enhance data storage efficiency and node size. Buterin elucidated the technical specifics of Verkle trees in the Ethereum Improvement Proposal documentation published in 2022.
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Verkle trees serve a similar purpose to Merkle trees, which consolidate all transactions within a block and generate proof of the entire dataset for a user seeking to verify its authenticity:
“The key property that Verkle Trees provide, however, is that they are much more efficient in proof size.”
While Verkle trees utilise structures akin to Merkle trees, a crucial distinction lies in nodes employing a specific hash type known as a vector commitment, which is transmitted to sub-nodes.
Vector commitments are poised to yield substantial long-term advantages to the Ethereum network.
The primary benefit of Verkle trees is to facilitate Ethereum’s attainment of statelessness, whereby nodes verifying blocks would no longer necessitate storing Ethereum’s state.
Verkle trees enable smaller proof sizes, which can be accommodated within each block of the Ethereum blockchain. Consequently, nodes can verify any block using the data contained therein.
The implementation of Verkle trees is anticipated to usher in a plethora of new functionalities, including reduced hardware requisites for operating Ethereum nodes, thus enhancing the network’s decentralisation.
Moreover, new nodes can swiftly join the network, with the capability to promptly synchronise with it.
The development of Verkle trees is ongoing, and integrating them into the Ethereum protocol will necessitate several modifications.
These include a novel data structure to preserve the network’s state, a revamped gas accounting model, a strategy for migrating Ethereum’s state from Merkle to Verkle trees, novel cryptography primitives, and new block-level fields.
Grayscale, the crypto asset manager, has seen a deceleration in outflows from its spot Bitcoin ETF, although analysts suggest there’s more potential for further depletion.
As per data from Bianco Research and Farside, the total outflow from the Grayscale Bitcoin Trust (GBTC) since its transition to a spot Bitcoin ETF reached $7 billion by Feb. 16.
Despite the significantly reduced rate of outflow, observers like ETF Store President Nate Geraci caution that the bleeding may not have ceased entirely.
January marked the peak of the exodus, witnessing $5.64 billion exiting GBTC by month-end, whereas February has recorded only $1.37 billion in outflows thus far.
In a Feb. 18 post on X, Jim Bianco, the founder of Bianco Research and a former Wall Street analyst, attributes much of the outflow to investors rebalancing portfolios and migrating to spot Bitcoin ETFs with lower fees.
He notes that the recent wave of ETF launches has slashed fees to between 0 and 12 basis points, in contrast to Grayscale’s 150 bps charge.
Bianco also highlights another factor contributing to the ongoing outflow from GBTC: the fund traded at a considerable discount to the BTC market price, approximately 44%, when BlackRock applied for its spot ETF in June 2023.
He explains, “A lot of money flows into ‘cheap’ BTC,” suggesting that Grayscale began closing this arbitrage-type trade upon its ETF conversion in January 2024.
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Nate Geraci remains cautious, indicating that it’s premature to assume the asset bleed has concluded.
He speculates that even with a substantial reduction in assets, Grayscale could still surpass other issuers combined.
Moreover, Geraci anticipates the potential launch of a “mini-GBTC,” a new spot Bitcoin ETF by Grayscale, with considerably lower fees.
Further outflows could materialise following a recent court order permitting bankrupt crypto lender Genesis to liquidate a portion of its investments in Grayscale.
Genesis reportedly held approximately $1.6 billion worth of shares in GBTC, the Grayscale Ethereum Trust, and the Grayscale Ethereum Classic Trust.
European Central Bank (ECB) executive board member Piero Cipollone addressed the European Parliament Committee on Economic and Monetary Affairs regarding the preparations for the issuance of a digital euro.
He outlined four key issues confronting the central bank and outlined how the ECB would ensure the public’s access to a freely available common means of payment.
Cipollone stated that the ECB had initiated the search for infrastructure providers for the European Central Bank digital currency (CBDC).
He stressed the importance of this proactive approach, stating, “Our readiness would be compromised if we started searching for possible suppliers only after that decision [to launch the digital euro] is made.”
Additionally, he highlighted that agreements would remain adaptable to legislative and technological advancements.
Moreover, Cipollone clarified that only legal entities with registered offices in the EU and controlled by EU nationals would be eligible for participation in the procurement process, potentially impacting Amazon’s involvement in the project.
Regarding the digital euro rulebook, Cipollone advocated for a unified framework encompassing rules, standards, and procedures to ensure harmonious implementation.
He emphasised that the digital euro should function similarly to cash, liberating users from reliance on international payment processors and ensuring uniform service across the eurozone.
Cipollone likened the digital euro infrastructure to railway tracks, accessible to various private entities while remaining state-owned.
However, concerns were raised by the European Money and Financial Forum regarding the legal implications of designating the digital euro as legal tender, citing issues surrounding the status of integrated private payment providers.
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To maintain financial stability, safeguards are being integrated into the digital euro design, ensuring it remains interest-free to avoid competing with savings institutions.
Restrictions will be placed on public digital euro holdings, with businesses and financial institutions barred from holding it directly. Instead, a mechanism will be established to link CBDC wallets with bank accounts, facilitating transactions without pre-funding the wallets.
Finally, addressing privacy concerns, Cipollone assured that the digital euro would offer high standards of privacy for online payments, surpassing current commercial solutions.
Offline transactions would mirror the privacy of cash, with only the payer and payee possessing transaction details.
Online transactions would provide minimal pseudonymised data to the ECB for settlement purposes, with users retaining greater control over their information compared to private payment systems.
Additionally, the digital euro would boast state-of-the-art cybersecurity measures.