Bullish Insights – Weekly Market Recap

The Bullish Insights Weekly Market Recap includes curated industry news and analysis from the Bullish team for the week of February 6, 2023.  

Bullish Exchange

This week’s peak trade volume (24h):  February 10, 2023, $1,109,381,192 (50,765 BTC)

Crypto market highlights

• According to Chainalysis, 2022 saw the largest total value of hacks in USD. The total value hacked in 2022 was $3.8bn compared to $3.3bn in the year before.
• When breaking down hacks by platform type, DeFi protocols were the most vulnerable in 2022, making up well over 75% of the total, followed by Centralized Services. DeFi hacks progressively grew since 2017 seeing an exponential jump from 2020 to 2021 when DeFi protocols garnered increased popularity.
• Centralized Services on the other hand exhibited a decreasing trend since its peak in 2019 when it made up over 80% of hacks compared to 2022 levels of just below 25%.
• Since the deployment of the Taproot upgrade on the Bitcoin network in November 2021, Taproot's adoption metric reached an all-time high of 7.47%, with utilization also rising to 2.84%.
• In January, derivatives volumes rose by 76.1% (~$2tn) comprising over 70% of the total crypto market. Spot volumes lost market share from ~32% in December to just below 30% in January.
• The 30-day correlation between Bitcoin and US equity markets have increasingly decoupled since the start of the month. More interestingly, the Dow Jones Industrial Average is seeing an inverse correlation from mid-January versus the S&P 500 and Nasdaq 100 which still exhibit a positive correlation of above 0.6.

Macro market highlights

• US equity markets retreated in last Friday's session after stronger than expected non-farm payroll data rose by 517,000 in January, increasing concern that the Fed could continue to hike in the midst of a resilient economy.
• Monday's session closed on a lower note for the second-consecutive day after investors pondered if the Fed would walk back on their dovish tone from last week.
• Jerome Powell’s remarks on Tuesday were surprisingly consistent with last week, highlighting that disinflation has begun which sent a rally in risk-on assets in Tuesday's session.
• Wednesday saw US equity markets erasing gains made earlier in the week, closing in the red. Tech stocks saw a major sell-off with the Nasdaq Composite down by 1.7%. The S&P 500 fell by 1.1%, and the Dow was down by 0.6%.
• US equity markets saw a second consecutive day of sell-offs with investors turning risk-off. The S&P 500 fell by 0.9%, and the Dow was down by 0.7%,, the Nasdaq Composite retreated by 1.0%.

Other updates

• According to Bloomberg, Kraken is close to a settlement with the SEC after an investigation into the exchange and whether it offered unregistered securities.
• After halting withdrawals in November last year, SALT Lending announced they had closed a $64.4mn financing round. The company is anticipated to resume full operations in the first quarter this year. (Source: COINTELEGRAPH)
• Brian Armstrong, Coinbase CEO has cited rumors that the SEC is considering a ban on staking activities for US customers. He tweeted “I hope that’s not the case as I believe it would be a terrible path for the US if that was allowed to happen.” (Source: forkast)
• Lido Protocol announced an upgrade, Lido V2 that will look at changes to its staking router allowing solo stakers to be Node Operators the upgrade will also enable withdrawal permissions for holders of stETH on the Beacon Chain.
• Dell has been added to Hedera’s growing list of global governing council. Other members include Google, fintech firm FIS, Shinhan Bank, Boeing, Nomoura. Dell is anticipated to be a node operator on the network. (Source: The Block)
• According to Peckshield, CowSwap protocol has been compromised. The hacker has since moved ~551 BNB tokens (~$181K) to Tornado Cash. (Source: COINTELEGRAPH)
• Cameron Winklevoss tweeted that Gemini exchange came to an in principle agreement with Genesis Global Capital for earn users to recover their assets. The exchange will also commit $100mn to the recovery for its earn users.
• Starkware is set to open-source its StarkNet Prover making it publicly available for developers to help review the code. The move is viewed as the protocol’s initiative in further decentralizing the platform.
• Open Exchange (OPNX) launched by 3AC founders Su Zhu and Kyle Davies as well as CoinFLEX, Mark Lamb and Sudhu Armugan, claims to offer users a place to trade bankruptcy claims. The exchange will restrict access for US customers along with 23 other regions. (Source: OPNX)
• Kraken exchange will be paying a $30mn fine for charges brought forth by the SEC for its failure to register its staking services program. SEC’s Chair Gary Gensler stated, “today’s action should make clear to the marketplace that staking-as-a-service providers must register and provide full, fair, and truthful disclosure and investor protection.” (Source: The Block)
• A court filing for Kraken’s customers was submitted by the US Internal Revenue Service (IRS) not long after the exchange agreed to settle $30mn in fines by the SEC. The IRS previously summoned the exchange back in 2021 but the exchange did not comply. (Source: CoinDesk)
• Mysten Labs announced a partnership with Tencent Cloud to grow the Sui ecosystem across three pillars in payments, game-fi and cloud services.

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