Market Deep Dive: Market drops after Kraken suspends its staking service following SEC charge

BTC$ and ETH$ both made yearly highs post-FOMC, but have come down 10% and 9% since.

AI and related altcoins again were in the lead this week.

AGIX was the highest gainer this week, up 126%. A token that seems to have benefited from the ongoing AI rally is GRT. The Graph Network token almost doubled on Tuesday. The project is an indexing protocol where anyone can build and publish open APIs, called subgraphs, for dApp developers to use. Last month, The Graph announced support for four new blockchains.

APT seems to be losing steam by falling 20% this week, after gaining 500% in one month. The reason? It has allegedly been trading as a “meme coin” in Korea. In late January, 24h trading volume of APT reached $566m on the Korean exchange Upbit alone. Apparently, retail was referring to the coin as “Apartment,” claiming that people who held APT would one day be able to afford a real apartment.

Tether Holding Limited released the end of year assurance opinion done by BDO.

  • Ended 2022 with zero exposure to commercial paper
  • $700 million net profit in the last quarter
  • $67bn in consolidated total assets and excess reserves of $960m
  • Just more than $66bn in liabilities, of which 99.9% relates to digital tokens issued
  • Highest percentage to date of assets allocated in US treasury bills, at 58%

This is how the balance sheet of a stablecoin issuer should look like. Rightly so, the CTO of Tether highlighted their “resilience and its ability to handle bear markets and black swan events, setting itself apart from the bad actors of the industry”. Speaking of stablecoins, yesterday Aave deployed its native stablecoin, GHO, on Ethereum’s Goerli testnet. GHO will be an over-collateralised stablecoin backed by crypto assets, where its supply will be controlled via a mint-and-burn mechanism. Aave will mint GHO when users deposit digital assets as collateral. Aave stakers can borrow GHO at a discount rate. GHO will face strong competition among DeFi protocols who have issued or are planning to issue stabelcoins. Maker’s DAI currently leads the bunch with a $5bn market cap, while Curve seems to be the next top protocol to release a stablcoin with crvUSD inching closer.

In the case of both Aave and CRV, stablecoin issuance seems to be an attempt to attract users and rejuvenate lending and DeFi activity.

Late on Thursday, Kraken agreed to shut its staking-as-a-service for US customers and pay $30m to settle SEC charges for offering unregistered securities.

Gary Gensler previously said staking through intermediaries, like Kraken, could meet requirements of the Howey Test. To Gensler, staking shows similarities to lending. Kraken’s market share of staked ETH is currently 7.43%. Liquid staking platforms, such as Lido and Rocket Pool, will likely gain from this.

Next week on Tuesday, US CPI numbers will be released.

Happy Trading!

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