BTC is currently trading around $40,600 and ETH around $2,350. Notable gainers in the last 24 hours are SC, FXS, and LEO. The global crypto market cap is ~$1.67T, down 3.1% over the last day. DeFi Total Value Locked is ~$57b and BTC dominance is around 51%.
Equities and bonds are trending higher while crypto’s downward slide continues. Interest rate decisions from the BoC and ECB are two of the week’s most notable economic events, in addition to Core PCE on Friday. It’s also another big week for earnings, headlined by reports from J&J, P&G, Netflix, Tesla, Visa, and many others.
Turning to crypto specific news, yesterday sparked a renewed focus on Ethereum’s client diversity after a Nethermind consensus bug caused the ~10% of Ethereum validators running Nethermind’s execution layer (EL) client to diverge from the network. The bug was found and patched within hours on Sunday, and validators running Nethermind only suffered a few dollars of losses as a result, but the modest impact directly stemmed from Nethermind’s minority usage. Large staking providers like Coinbase, Lido, and Binance are over indexed to running Geth, which is the supermajority EL client, and a similar bug in Geth would’ve posed a cataclysmic tail risk for Ethereum (i.e., Geth users could’ve essentially lost all of their ETH if a similar event impacted the supermajority client.). Check out our previous coverage of client diversity or see Ethereum developer Dankrad Feist’s overview of the worst case scenario here (scenario 3). The short takeaway is that Ethereum staking is not risk free, and one can substantially reduce their risk by staking with minority clients (i.e., it’s best to avoid Geth, as well as Prysm and Lighthouse to a lesser extent).
Notable news includes: MetaMask introduced an Ethereum validator staking feature powered by ConsenSys; a Bloomberg litigation analyst estimated there’s a 70% chance that Coinbase prevails over the SEC in the agency’s lawsuit against the crypto exchange; the SEC acknowledged a proposed rule change enabling the Nasdaq to list and trade options on BlackRock’s Bitcoin ETF, setting up the potential for options to begin trading in a month or two; Solana stablecoin volumes have already breached its monthly record just ~2/3rds of the way through January; Terraform Labs filed for Chapter 11 Bankruptcy in Delaware; and, a Colorado pastor and his wife had their assets frozen by a state judge after making millions on a crypto that they claim was made on “God’s instruction.”
Sign up to conveniently receive GSR crypto content in your inbox.
Authors:
Matt Kunke, Research Analyst | Twitter, Telegram, LinkedIn
Brian Rudick, Senior Strategist | Twitter, Telegram, LinkedIn
This material is provided by GSR (the “Firm”) solely for informational purposes, is intended only for sophisticated, institutional investors and does not constitute an offer or commitment, a solicitation of an offer or commitment, or any advice or recommendation, to enter into or conclude any transaction (whether on the terms shown or otherwise), or to provide investment services in any state or country where such an offer or solicitation or provision would be illegal. The Firm is not and does not act as an advisor or fiduciary in providing this material. GSR is not authorised or regulated in the UK by the Financial Conduct Authority. The protections provided by the UK regulatory system will not be available to you. Specifically, information provided herein is intended for institutional persons only and is not suitable for retail persons in the United Kingdom, and no solicitation or recommendation is being made to you in regards to any products or services.
This material is not a research report, and not subject to any of the independence and disclosure standards applicable to research reports prepared pursuant to FINRA or CFTC research rules. This material is not independent of the Firm’s proprietary interests, which may conflict with the interests of any counterparty of the Firm. The Firm trades instruments discussed in this material for its own account, may trade contrary to the views expressed in this material, and may have positions in other related instruments.
Information contained herein is based on sources considered to be reliable, but is not guaranteed to be accurate or complete. Any opinions or estimates expressed herein reflect a judgment made by the author(s) as of the date of publication, and are subject to change without notice. Trading and investing in digital assets involves significant risks including price volatility and illiquidity and may not be suitable for all investors. The Firm is not liable whatsoever for any direct or consequential loss arising from the use of this material. Copyright of this material belongs to GSR. Neither this material nor any copy thereof may be taken, reproduced or redistributed, directly or indirectly, without prior written permission of GSR.
