All eyes have been on the digital asset market as we experience another volatile week. Bitcoin, in particular, showcased a remarkable recovery, bouncing back from a low of $61,000 to surge past the $71,000 marking a 16.3% gain. This rebound is seen by many as a strong indication that the market could be gearing up for further gains, potentially reentering a phase of price discovery after the recent shakeout. This suggests a resilient optimism among investors, despite the short-term volatility.

Bitcoin Weekly Price Chart

Federal Reserve's Decision on Interest Rates

There was much anticipation over the Federal Reserve's decision regarding interest rates this week. Ultimately, the Federal Reserve decided to keep interest rates unchanged. This decision bought up discussions among central bankers who are now signalling the possibility of three rounds of rate cuts by the end of 2024.

Since higher interest rates usually make people less likely to borrow money and invest, especially in risky areas like cryptocurrencies, the decision to keep rates steady with a plan to decrease it further by the end of 2024 is a good sign.

Kucoin Lawsuit

KuCoin, a leading cryptocurrency exchange, is facing criminal charges in the U.S. The founders, Chun Gan and Ke Tang, are accused of running an unlicensed money transmission business and breaching anti-money laundering (AML) laws. This legal action has led to significant withdrawals from centralised exchanges (CEX).

We advise any of our clients who hold crypto on Kucoin to consider moving them to a personal wallet or another exchange to mitigate risk.

Bitcoin ETF Flows

An area of concern this week has been the performance of Bitcoin Exchange-Traded Funds (ETFs), which have experienced negative flows. Notably, the Grayscale Bitcoin ETF reported $2 billion in outflows, marking a record bleed in crypto funds. This trend highlights a cautious or bearish sentiment among some investors, with the Bitcoin ETF flows revealing a net outflow streak that has persisted for five consecutive days for the first time. There's speculation that this selling pressure might stem from the bankruptcy estate of Genesis Global, although the insights into the exact cause aren’t known. This illustrates that there are always uncertainties in the crypto market, but even after 5 days of negative ETF Flows Bitcoin's price is showing promising signs of market confidence.

Ethereum

Ethereum's price saw a notable increase from $3,084 to $3,662, which is a 21% gain on the weekly. This upward trend coincides with significant developments, including Grayscale's decision to incorporate ETH staking into its ETF application, a move that follows in Fidelity's footsteps.

Ethereum Weekly Price Chart

Additionally, the Non-Fungible-Token (NFT) market on Ethereum witnessed significant transactions with two CryptoPunks NFTs selling for $16 million each, which could indicate the beginning of a new NFT cycle. NFT marketplace Blur continues to strengthen its position as the leading marketplace for buying and selling NFTs. In the graph below we see its share of weekly volume over the past 2 years has continued to increase.

Solana

Solanas price has been very up and down this week. Ranging from $165 to $196. Much of this volatility is still tied to the current memecoin narrative we covered last week and expect to be an ongoing trend influencing the price of Solana.

Solana Weekly Price Chart

Solanas ecosystem continues to grow at an exponential pace. The Total Value Locked (TVL) within Solana has grown from around $200 million USD at the start of 2023 to over $4.6 billion USD today. This shows how fast Solanas ecosystem is growing and is a good indicator that developers and users want to interact and build on their network.

Solana TVL Growth

Real World Assets (RWAs)

Real world assets in decentralised finance refer to assets that exist in the physical world and are tokenised on a blockchain to enable their use in decentralised finance applications.

This week in the cryptocurrency and decentralised finance (DeFi) spaces, a recurring narrative has re-emerged that is drawing significant attention due to the remarkable performance of specific assets linked to the tokenisation of real-world assets (RWAs). Notably, Ondo (ONDO), Polymesh (POLYX), and Centrifuge (CFG) have seen impressive gains of 125%, 186%, and 81% respectively over the last 7 days.

The main reason behind this increase in RWA tokens is due to BlackRock starting a new real-world asset (RWA) tokenisation fund on the Ethereum network. Larry Fink, the chairman and CEOof Blackrock said that the ETF's "are just stepping stones towards tokenisation" he believes "this is where we're going to be going."

Ondo Weekly Price Chart

This trend highlights the increasing recognition of the value that tokenisation of real-world assets brings to the DeFi sector, not just in terms of digitisation, but in creating more inclusive, efficient, and interconnected financial markets. The innovative approaches to integrate RWAs into the blockchain ecosystem will enhance liquidity, and expand the usability of DeFi applications. Blackrocks RWA fund development and the performance of ONDO, POLYX, and CFG this week could signal a broader shift in investor sentiment towards the long-term potential of RWAs in DeFi, marking an exciting chapter in the evolution of decentralised finance.

AI Sector

In the AI sector, following the Nvidia GTC event, which is renowned as the premier conference for developers, the AI token market experienced a downturn. Bittensor (TAO), reached a peak of $695 during the event but subsequently declined to $563. Similarly, Render (RNDR) saw its value rise to $12.11 before falling back to $10.37. Both tokens are making gradual increases back up from these local bottoms.

Render Weekly Price Chart

In other news, FTX and Alameda Research made headlines in 2021 for jointly acquiring an 8% stake in the AI startup Anthropic, an investment valued at $500 million at the time. Recent reports suggest that bankers are now looking to buy FTX’s stake in Anthropic, with the shares now estimated to have doubled in value to $1 billion.

Most of our attention is currently looking at the compute layer and model layer of the AI sector. These include Bittensor, Render, Akash and an upcoming token launch called io.net. The figure below sub categories the different layers in the AI sector and what applications belong to what layer.

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