Crypto Scoop: Bitcoin Trades At $41,000 While Bitcoin ETF Volume Exceeds $10 Billion

In the wake of the recent Bitcoin ETF approvals, the cryptocurrency space is buzzing with heightened interest and rapid developments. In this edition of the Crypto Scoop, we review the following:

• Price moves of top cryptocurrencies
• Ethereum Dencun update
• Tether’s address on stablecoin controversies
• IRS policy on crypto reporting 

Price Moves Of Top Cryptocurrencies

This week, Bitcoin traded at $41,000 and ETH at $2,400. However, the real standout was the explosive performance of spot Bitcoin exchange-traded funds (ETFs). On January 16, these ETFs smashed records, generating an impressive $1.8 billion in daily trading volume—over three times the combined volume of all 500 ETFs launched in 2023.

Since their recent launch in the United States, spot Bitcoin ETFs have dominated the market, racking up trading volumes exceeding $10 billion as of January 16. The remarkable success of these ETFs has attracted substantial attention from investors.

Following the SEC's approval of 11 spot Bitcoin ETFs, Google Trends reported a peak interest score of 100 for the search term "bitcoin" during the week of January 7th to 13th, 2024. The surge in interest indicates a growing curiosity around cryptocurrency, with attention shifting towards Bitcoin's upcoming halving.

Brad Garlinghouse, CEO of Ripple, envisions a ripple effect in cryptocurrency ETF approvals following the green light for Bitcoin ETFs by the U.S. Securities and Exchange Commission (SEC). Speaking at Davos 2024, Garlinghouse expressed confidence that the SEC's acceptance of Bitcoin ETFs will pave the way for the approval of various cryptocurrency-related ETFs throughout 2024.

Anthony Scaramucci, founder of Skybridge Capital, foresees a bullish future for Bitcoin, predicting a surge beyond $170,000 next year. He attributes this optimistic outlook to the impending Bitcoin halving and the increasing institutional demand fueled by the approval of spot Bitcoin ETFs.

Ethereum’s Dencun Upgrade Goes  Live on Goerli Testnet

In a landmark development for Ethereum, the highly-anticipated Dencun upgrade has gone live on the Goerli testnet, marking the platform's most significant enhancement since the Shapella upgrade in April 2023. While Shapella allowed the withdrawal of staked ether (stETH), Dencun is poised to revolutionise Ethereum's Layer 2 (L2) networks by substantially reducing transaction costs.

Initially scheduled for October 2023, the Dencun upgrade faced delays, pushing its deployment to late Q1 or early Q2 2024. The deployment follows a phased approach, with Goerli being the first testnet to experience Dencun. However, the launch of Goerli encountered challenges, failing to reach a consensus and finality.

Developers attribute the failed deployment on Goerli to low participation, approximately 80%, and validators being offline. There is speculation that validator issues may arise from operators not upgrading a piece of software or the presence of a bug. Due to Goerli's diverse set of validators, resolving these issues might take some time, with developers planning a thorough non-finality test in the coming hours or days.

Despite the setback on Goerli, the Dencun upgrade is set to progress to the Sepolia testnet on January 31 and the Holesky testnet on February 7 before its final release on the Ethereum mainnet.

Tether Address Controversial Take On Stablecoins

In a surprising turn, stablecoins have emerged as the primary choice for illicit transactions, overshadowing Bitcoin's historical dominance, according to a report by blockchain analytics firm Chainalysis. The report highlights that while Bitcoin held the title of the "cryptocurrency of choice" for criminals from 2018 to 2021, stablecoins took the lead in 2022 and 2023. The shift raises concerns about the adaptability of cybercriminals in navigating alternative means of transacting.

Tether, the issuer of the stablecoin USDT, has vehemently contested a United Nations Office on Drugs and Crime (UNODC) study that singled out stablecoins, including Tether, for their alleged role in illicit activities. Tether argues that its use of public blockchains ensures transparency and traceability for every transaction, making it an impractical choice for illegal activities. The stablecoin issuer emphasises its positive impact on developing economies in emerging markets, claiming that the UNODC report overlooks the crucial role stablecoins play in supporting these communities.

In a separate development, TrueUSD (TUSD), a USD-pegged stablecoin, experienced a tumultuous decline, deviating from its $1 peg to hit $0.985 on January 15. Speculations abound that TrueUSD holders engaged in a massive sell-off, exchanging hundreds of millions of tokens for the competing stablecoin, Tether (USDT). Market experts attribute these sell-offs to whale activity and market dynamics, resulting in TrueUSD losing parity with the USD for the second time in the last two months.

IRS Eases Crypto Reporting Burden: No Obligations for Transactions Above $10K

In a welcome reprieve for U.S. businesses navigating the complex realm of cryptocurrency transactions, the Internal Revenue Service (IRS) has temporarily suspended reporting obligations for transactions exceeding $10,000. This decision follows a revision of the Infrastructure Investment and Jobs Act (IIJ Act) by the U.S. Treasury Department and the IRS, as revealed in a recent IRS announcement on January 16.

Initially, a new law took effect on January 1, mandating all U.S. businesses to report cryptocurrency transactions above $10,000. However, recognising the evolving nature of the crypto landscape, the IRS has opted to delay the enforcement of this rule until it establishes a comprehensive regulatory framework. The IRS announcement clarifies that, at present, digital assets are not required to be factored in when determining whether cash received in a single transaction or related transactions meets the reporting threshold.

While the decision offers a temporary sigh of relief for businesses dealing with cryptocurrencies, the IRS has not specified when it intends to issue the much-anticipated regulations outlining how U.S. businesses should report cryptocurrency transactions.