This week in Crypto: Week of February 10 

We cover weekly key developments in the world of crypto assets and blockchain that have influenced price action and general sentiment.

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Illustration: Milica Mijajlovic

Investment developments  

On Wednesday, February 8, we saw a decline in Bitcoin (BTC) and other cryptocurrencies, with Bitcoin falling below $22,000. One of the main reasons for the decline is the US Federal Reserve’s (Fed) intent to further raise rates. At the time of writing, BTC is trading at $21,906.   

The Fed did not clearly indicate whether rate hikes would be paused in their last meeting. Fed’s governor, Christopher Waller, stated the opposite:  

“Interest rates [might be] higher for longer than some are currently expecting,”  

At the moment, investors are awaiting the core inflation data (CPI), which will be released on February 14. This data will show the effectiveness of the rate hikes and possibly cause more turmoil in crypto and broader financial markets.  

Finally, according to data from CoinMarketCap, the global crypto market cap stands at $1.02 trillion, a 3.93% decline since February 9. Meanwhile, the total crypto market volume over the last 24 hours is $74.82 billion, a 14.76% increase since February 9.  

The Crypto Fear and Greed Index, which uses six measurements to assess the current sentiment in the markets, shows a neutral emotion with a value of 48. The index rates market emotions from 1, extreme fear, to 100, extreme greed.  


Crypto Fear & Greed Index. Source: Alternative 

These recent readings suggest that risk appetites remain healthy in crypto markets. Last week the index indicated a level of 56, or greed, which was a significant improvement compared to what was seen in November (low 20s) during the FTX implosion fiasco that washed out a lot of value from crypto markets.  

Crypto Exchange developments  

FTX and its debtors reached out to politicians and political parties to which former FTX CEO Sam Bankman-Fried made donations. According to press releases, the recipients of this communication are required to return the donations by February 28 or face legal action. This new development is probably the continuation of the statements made by FTX in late December that recipients of donations should return them voluntarily.   

To the extent such payments are not returned voluntarily, the FTX Debtors reserve the right to commence actions before the Bankruptcy Court to require the return of such payments, with interest accruing from the date any action is commenced,” the debtors claimed

However, the biggest news among crypto exchanges was Kraken receiving a $30 million fine from the US Securities and Exchange Commission (SEC) after the watchdog organization said Kraken subsidiaries failed to register the sale of their staking programs.  

Following this fine, Kraken stated in a blog post that they will unstake all assets enrolled in the on-chain staking program made by their US customers. One caveat, though, relates to staked Ethereum (ETH). It can only be unstaked after the Shanghai upgrade. 

This bold move by the SEC further depressed investor sentiment across crypto markets, as there is a concern that other major exchanges could also be affected. Meanwhile, Coinbase’s CEO, Brian Armstrong, tweeted out his concerns while maintaining his stance that staking is “not a security.”     

Web3 developments 

A popular song by the performing artist Rihanna, “B**** better have my money,” is being offered as a non-fungible token (NFT) through Web3 startup Anotherblock. Holders of this NFT will receive partial streaming royalties. This is among numerous announced developments the startup is working on, aimed at offering fractional NFTs that will allow holders to earn partial royalties from artists’ work. The company tweeted that the Rihana NFT was sold out in just a few minutes.    

Such developments may be pointing to the future of music and royalty-sharing schemes that could push NFTs more into the mainstream.  

That being said, network activity on the Bitcoin blockchain exploded thanks to the Ordinals protocol, which allows NFTs to be stored on the Bitcoin blockchain. Over 13,000 Ordinals have been minted so far. CryptoQuant data shows that the last time such activity on the Bitcoin blockchain was seen was during the 2021 China ban on crypto miners.  

The continuation of this surge in activity could lead to an increase in transaction fees. While short-term it could be an issue, long-term, it should be a positive signal for the network security of Bitcoin.  

Following the massive earthquake and natural disaster that hit Turkey and Syria, the Web3 community came together to provide aid for the victims. Bitget announced that they would pledge roughly $53,000, as did On the other hand, Bitfinex, Keet, Synonym, and Tether all pledged to send roughly $265,500 in aid. 

NFTs were also mentioned as a form of aid, with the Turkish NFT artist Pak tweeted about donations and the development of an NFT aid initiative for additional support. The situation surrounding the earthquake and various aid efforts is continuously developing; therefore, more blockchain and Web3-related efforts may appear in the near future.       

DeFi developments 

Bank of America (BofA) released a research report on Wednesday, February 8, discussing decentralized finance’s (DeFi) current functionality. The report stated that current developments barely scratch the surface of the possible functionalities.  

According to BofA, Gauntlet, a financial risk modeling and simulation platform, is driving the evolution of the space, but they see regulatory issues as major hurdles.   

“The inability to identify users, access credit scores, and perform [know your customer/anti-money laundering] requirements creates regulatory headwinds and limits use cases to trading platforms and overcollateralized lending products, which also creates headwinds for mainstream adoption,” analysts Alkesh Shah and Andrew Moss wrote

Tech developments 

Project Cardano will enhance the cross-chain functionality for DeFi applications that are being built on their network, according to a tweet from one of the developers. The proposal officially took effect on February 11 at 01:00 CET. Initially, the changes will be tested in a virtual environment before being released to the public.   

These upgrades will bring enhanced cryptographic features to Cardano while enhancing the cross-chain decentralized application (dApps) developments on Plutus, the smart contract platform on the Cardano blockchain.  

The importance of cross-chain bridges cannot be overstated, as they allow transactions across various blockchains to occur. Furthermore, the upgrade comes as Cardano’s DeFi applications crossed $100 million in total locked value (TVL) last week, representing an eight-month high. Note that the interest in Cardano DeFi spiked after they launched the overcollateralized “djed” stablecoin. This coin is backed by other tokens and requires a 400% to 800% collateral value to be posted before it is issued to a user.