[Daily] Has Solana run out of lives?

Good morning! Welcome to The Daily Moon. Crypto’s gone mainstream in Brazil. The country’s oldest bank will allow residents to pay their taxes via crypto. Rio de Janeiro permits it too. And just a few months later, crypto can be officially used for all payments in Brazil.  

As of Monday, 8PM IST

The markets were in the red. Bitcoin slipped below $21,700 and Ethereum slid to $1,480 levels. Nasdaq rose in early trade. Back home, Sensex and Nifty ended lower on a steep selloff.  

BTC’s Creeped Out

The king crypto had a rough weekend. First, there was the staking ban on a crypto company. Next, came the news of blockchain firm Paxos’ issuance pause of the BUSD stablecoin. Bitcoin is spooked. 

Where’s BTC at?The token dropped over 5% in the past week and slid to $21,650 levels. The technical charts indicate a “death cross”, a long bear market signal. A death cross happens when short-term prices such as the 50-week average drops below long-term indicators such as the 200-week average. HODLers typically look for this metric to make sell decisions. Retail investors still have trust in Bitcoin and are on buy mode. Whales, however, have started to make exits. 

Whose fault is it?The regulatory flux is to blame. BTC had overcome the FTX fiasco after two months in January. A bunch of regulatory warnings have awakened the bears again. BTC is under the clutch of two things:

1. Regulatory changes: There is a lot of confusion in the crypto world around what’s allowed and what’s not. For instance, a potential stablecoin on one company may cause a ripple effect in the entire market. Similarly, staking bans may lead to outflows from crypto.

2. Inflation: The US will release its January inflation data on Tuesday. If inflation numbers are lower, the US Fed may hike rates less often. It is positive for crypto. But if the reverse happens, BTC’s price will be under pressure.  

Some relief…While we are on BTC, its mining difficulty has dropped by 0.5%. This means that it’s gotten slightly easier to mine BTC. And it’s good news for BTC miners who’ve struggled to make money. 

ETH Is Optimistic 

Ethereum is on a rollercoaster. It rallied above $1,700 and caught on with the bulls. But that was a cue for traders to book profits and exit en masse. This has pushed the price down, below $1,500. 

What’s happening?Jargon time. There is something called Net Taker Volume, which is in deep red. This means that traders have sold aggressively. The more the traders sell, the lower ETH gets. New addresses on the network fell 88%. That’s not all. The Open Interest, a metric which indicates market demand, fell 5%. TL;DR Ethereum is lukewarm. 

But all’s not lost yetThe Shanghai upgrade, scheduled in March, will help investors unstake their Ethereum. There’s hope that it will attract investors to HODL long term. The funding rate has also turned positive, another sign that the altcoin will get together with the bulls very soon.

Is There Hope For Solana?

The Solana market can’t catch a break. The rising tide of crypto left it dry and it has stayed there. There is now a fear that the token may get left behind. There has been a drop in DeFi activity on the network, which all feels very doom and gloom. 

Where is it bleeding?There’s a list so here goes:

1. The number of active wallets are dropping. 

2. The total value locked has been flat for the past few months. 

3. dApps on the network are not doing very well and customers are not interacting with apps built on the Solana network. 

4. FTX’s collapse brought down a lot of love for the token. 

Is there a single positive?Yes, NFTs. The activity has been on the up. The number of NFTs minted and sold have increased and so is the market share — 6% to 14% — that Solana has in the sector. 

Interpol Will Have Metaverse Jurisdiction

The interpol is looking into how it can police the metaverse. Short answer: they don’t know how. Long answer: they're holding virtual meetings and events to get themselves used to VR and understanding the technology. 

What constitutes a metaverse crime?It hasn’t been decided yet. It’s something that is still WIP.  But the more the metaverse evolves the more we will be able to see these things firm up. 

There are existing problemsThe metaverse already has a growing governance problem. It has a sexual assault problem. Phishing, impersonation, fake giveaways and social engineering are all issues bubbling under the surface.

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Who are we? This newsletter’s ambition is to educate (and to entertain). The world of money is changing everyday and we want to help you decode what’s happening in the world of crypto, public markets in the US and India.