February 16, 2024

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Next FOMC meeting: Mar 20th 2024

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The News Room

Ethiopia Embraces Bitcoin Mining in $250 Million Tech and Energy Initiative

Ethiopia's government is set to start Bitcoin mining through a partnership with Data Center Service, a subsidiary of West Data Group, as part of a $250 million initiative announced by Ethiopian Investment Holdings to establish advanced data mining and AI operations. This move, which will deploy Canaan Avalon miners, is part of Ethiopia's strategy to use its tech and energy assets to draw international investments and promote economic growth. The venture comes amid rising mining activity due to the upcoming Bitcoin halving, sparking debates on its energy use in a country with significant electricity access challenges. Ethiopia's regulatory approach to cryptographic products shows a cautious yet optimistic stance towards mining's economic benefits while addressing energy and environmental concerns. The influx of Chinese miners, attracted by low electricity costs and Ethiopia's open attitude towards tech investments, highlights Ethiopia's strategic role in China's African expansion, despite concerns about the impact on local energy supplies.

Ether-Based Crypto Dollar Issuer Ethena Raises $14M, Opens Access to Public

Ethena Labs has launched its ETH-based synthetic dollar, USDe, after securing $14 million in a funding round from major investors including PayPal Ventures and Franklin Templeton, reaching a total of $20 million in venture capital. Unlike traditional stablecoins, USDe offers a crypto-native dollar alternative using ether liquid staking tokens balanced with short ETH perpetual futures to maintain its value around $1, aiming to disrupt the $130 billion stablecoin market. The protocol, which offers a yield-generating opportunity for investors outside the U.S., has already attracted over $220 million in deposits, with expectations to surpass $1 billion soon. Ethena's innovative approach seeks to provide a profitable and decentralized savings vehicle, despite the risks associated with high stablecoin yields as evidenced by the Terra-Luna collapse.

Iowa Judiciary Committee Advances Bill to Modernize Digital Asset Transactions

The Judiciary Committee in Iowa has approved House File 2519, a progressive digital asset bill that seeks to amend the Uniform Commercial Code to incorporate digital assets and electronic records into commercial transactions. This legislation is designed to address the complexities and opportunities of digital assets in commerce by offering clear definitions and legal frameworks for electronic records, digital assets, and smart contracts, aiming to enhance security and clarity in digital transactions. The bill recognizes smart contracts and facilitates electronic recording of real estate, aiming to modernize and simplify the regulatory environment for digital assets by treating them as personal property. It also provides protections for purchasers of controllable electronic records and maintains neutrality towards a national digital currency (CBDC), indicating a significant step towards integrating digital assets into Iowa's commercial and legal frameworks, with implications for regulatory oversight, legal and operational complexities, and technological adjustments for digital asset service providers and users.

Trading Desk Insights

Bitcoin has surged over 25% to surpass $52,000 since the beginning of February. This recent uptick is noteworthy as it coincides with movements in the U.S. dollar index (DXY) and the 10-year Treasury yield—assets typically not aligned with risk assets like Bitcoin and Nasdaq. Additionally, the current price is trading 12% above the 20-day moving average, a deviation uncommon in various financial products. While the prevailing ETF narrative suggests the potential for prices to continue their parabolic trajectory, it's customary to observe a consolidation period before gathering additional upward momentum. Many market participants anticipate a potential pullback towards $48,000.

Open interest remains elevated, and funding rates continue to rise, indicating a scenario where sellers are being wiped out, and buyers are currently dominating.

Analyzing ETF flows, the market experienced another round of inflows totaling $477.4 million. Simultaneously, Grayscale witnessed increased outflows, reaching $174.6 million, its highest level since February 1st.

Coinbase released its quarterly results in after-hours trading yesterday, revealing a remarkable 103% surge in total trading volume and positive net income for the first time since Q4 2021. Notably, the recent rally to $53,000 has been predominantly fueled by the U.S. market, evident in Bitcoin's price premium on Coinbase reaching a 9-month high. The gap to Binance, initially at $50, has recently narrowed to $20 as buying enthusiasm cools.

On the broader market front, stocks declined on Friday following another high inflation report, sparking concerns that Federal Reserve rate cuts may be delayed beyond earlier expectations.

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