Doge Eat Doge

David Canellis

This is a segment from the Empire newsletter. To read full editions, <a href="https://blockworks.co/newsletter/empire">subscribe</a>.



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Our internet is quickly being filled with automated slop.



Blockchains are destined for the same treatment.



It’s actually been happening for years. Take active address counts: In an entirely humanly-operated onchain world, active addresses would reflect the number of real users on any particular network.



That’s obviously not the case, as Blockworks Research and the 0xResearch newsletter <a href="https://blockworks.co/news/0xresearch-newsletter-evaluating-blockchain-metrics">have already shown</a>.&nbsp;



Bots, spammers, airdrop farmers and other code-controlled entities commonly wield thousands — and even tens of thousands — of addresses. By the raw numbers, those players tend to drown out individual users.



The active addresses metric really only says one thing about a network: how cheap it is to use (which makes spamming a breeze).&nbsp;



Take that logic one step further and questions arise over how much of DEX volumes on chains like Solana and Base are the result of wash trading.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXd4WktoyexaZFX4UsOJCMJsHpO0DqLL_lhjyUKE09W7Iu3WgUhC-k0SP-OoCAm-bwgYFuwvs8h7ZpBJVLVHRJEYS1ZXKCtDz0E7-AjSDv4VpS01-tNNeBMpvb4G5-X6E_VSYwMxkQ?key=HMbX2nZD-YkMWlQzbf4VU4IX" alt=""/><figcaption class="wp-element-caption">Pump.fun’s cumulative active address count has swelled by ~4.5 million since the start of November</figcaption></figure>



Still, while Web2 struggles with its own transition into an AI-generated wasteland (check the <a href="https://www.404media.co/ai-generated-christmas-music/">mangled</a> robot Christmas tunes that targeted unaware YouTube users this year), crypto is taking a more holistic approach.



Embrace the slop. Make your own and tokenize it. Trade it.



Pump.fun arguably was the first to perfect that roadmap. Virtuals Protocol wants to run it back by allowing users to create their own AI agents complete with their own tokens.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXcS2UfMmnXur4hk1Do7dcBT5u_FmYk8LsA5o9dGyeWOgiceOPqyGZAwHs8hD2KpXW4EYpTM2BHYEFCIyshCGDXoo41cdZHgYwMfQtCxKOj44Fy_xZd1gXRZ36w4W7WvJy2CJDLKag?key=HMbX2nZD-YkMWlQzbf4VU4IX" alt=""/></figure>



Almost 300 AI agents are now on Virtual Protocol’s leaderboard. More than 12,600 token pairs have been <a href="https://dune.com/0xludic/virtuals-overview">created</a> overall.



For now, Virtuals is still small relative to Pump.fun. We’ve had almost a full year of the latter, with daily volumes going from under $1 million to as much as $5.6 billion in November.



Virtuals’ AI agent launchpad has only been live since October, and its volume topped out at $24.5 million at the end of November.



For what it’s worth, Virtuals’ cumulative daily active address count has skyrocketed from under 1,000 to 96,000 since the launchpad went live.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXe2-Lw0fGdjBbyegRa_pO8M4hMqGheUANvjGciAIrdg15Sdj86GPy1SWMIGOiWUvXXDk3lKYvuuSxeD1AGflx80TOkA2MhwaRvfYamF9PhtuFU8VNC9wItk5ezS94qA5C5Chj0E0Q?key=HMbX2nZD-YkMWlQzbf4VU4IX" alt=""/><figcaption class="wp-element-caption">Virtuals’ volume is back on the rise alongside its native token VIRTUAL — up 125% in the past month</figcaption></figure>



Of course, active address counts say very little about adoption from real users. Who knows how many of those new active addresses interacting with Virtuals were carbon-based lifeforms.



Where crypto is headed, I’m not sure it even matters.



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Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.



Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. <a href="https://blockworks.co/newsletter/onthemargin">Subscribe to the Forward Guidance newsletter</a>.



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Crypto is welcoming its new AI overlords

Jack Kubinec

This is a segment from the Lightspeed newsletter. To read full editions, <a href="https://blockworks.co/newsletter/lightspeed">subscribe</a>.



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The inaugural Solana AI hackathon concluded on Monday.



Over 400 projects threw their respective hats in the ring for a <a href="https://x.com/Lightspeedpodhq/status/1871549515226140995">contest</a> offering cash prizes but more importantly the prospect of potentially-lucrative attention to so-called AI agents, which are currently flooding crypto social feeds.&nbsp;



Multiple entrants already have tokens trading at millions of dollars-worth of market cap, and agent copilots for crypto trading as well as AI agent “swarms” were buzzy categories.&nbsp;



Winners of the hackathon, organized by SendAI, will be announced around Jan. 10, SendAI co-founder and CEO Yash Agarwal told me. A list of entrants and relevant details is expected to be <a href="http://solanaaihackathon.com">posted</a> later today.&nbsp;



<a href="https://blockworks.co/news/solana-based-reflect-wins-radar-hackathon">Hackathons are common</a> in Solanaland, but what makes this one unique is the number of contestant tokens already trading. The total market capitalization of Solana AI agent hackathon tokens has crossed $200 million, Agarwal told me. That’s roughly the size of Solana DeFi protocol Orca’s native token.



One such project is FXN, a so-called AI swarm whose native token briefly touched $70 million in market cap after launching around Dec. 11. It currently has roughly $44 million in market cap, according to DEX Screener.&nbsp;



FXN is a protocol that lets multiple AI agents work together to accomplish more than what a single agent is capable of, according to a white paper dated Oct. 3, 2024. The white paper gives a sample use case of a group of agents essentially operating as a social media marketing firm to create and promote social content.



AI agents tied to crypto tokens exploded in popularity after an unhinged social media chatbot with a token <a href="https://blockworks.co/news/lightspeed-newsletter-ai-bot-goat-memecoin">went viral in October</a>. The number of entrants in a hackathon announced just two weeks before it began underscores how much competition for mindshare there is among crypto AI projects.



Many projects share a “similar focus” of creating an “intelligent interface for the Solana ecosystem,” Potatoe, the anonymous lead developer of a hackathon project called Project Plutus, told me.&nbsp;



Users don’t need AI bots who execute actions that they could do themselves, which is why Project Plutus built an AI companion that watches charts and can trade while users are away, they added.



There do appear to be a lot of trading-focused agents based on an initial list that was shared with me by the hackathon’s organizers. 



“The Solana AI Hackathon underscores how on-chain trading and DeFi are emerging as key verticals for AI agents. These use cases will likely drive innovation in Q1 and Q2 2025,” the X threader 0xJeff <a href="https://x.com/Defi0xJeff/status/1871558607294329276">wrote</a>.



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Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.



Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. <a href="https://blockworks.co/newsletter/onthemargin">Subscribe to the Forward Guidance newsletter</a>.



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‘Agents’ swarm inaugural Solana AI hackathon

Casey Wagner

This is a segment from the Forward Guidance newsletter. To read full editions, <a href="https://blockworks.co/newsletter/forwardguidance">subscribe</a>.



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After several drafts and 44,000 comments, the IRS’s new <a href="https://www.irs.gov/newsroom/irs-updates-draft-version-of-form-1099-da-digital-asset-proceeds-from-broker-transactions-requests-comments-on-form-planned-for-2025">1099-DA</a> form is here.&nbsp;



Or it will be on Jan. 1, 2026, at least — but starting in 2025, brokers are going to have to keep track of some new information.&nbsp;



You may remember that the term “brokers” — and how tax regulators would define them — caused quite a stir back in 2023. Earlier drafts of the 1099-DA form included a section to identify the “broker type,” but this has since been removed.&nbsp;



In doing so, the IRS essentially punted this issue down the line: They know they will have to issue rules around DeFi actors eventually, but they need more time.&nbsp;



Beginning in 2025, “custodial brokers” will have to report gross proceeds, and then in 2026, they will have to report cost basis for certain transactions. These actors are exchanges (think Coinbase) that act more or less like traditional equities brokers; they hold assets on behalf of clients and provide a trading platform.&nbsp;



Decentralized exchanges and NFT marketplaces are not exempt, but they will probably have to rethink how they collect data in 2025 in order to meet the reporting requirements.&nbsp;



For accountants working with crypto-holding clients, the 1099-DA form is going to be an adjustment, IRS officials said on a recent <a href="https://www.webcaster4.com/Player/Index?webcastId=51630&amp;g=b15de5ee-84aa-4fb9-8ef0-56492b4f426c&amp;uid=7137697&amp;sid=">webinar</a>. Taxpayers who received 1099-DA forms will have details of their transaction history for the past year, but the custodial broker may not automatically calculate and input the cost basis information.&nbsp;



“When you get that 1099-DA, and it only has gross proceeds, hopefully you will know the next questions to ask your clients to be able to fill in that information,” Seth Wilks, executive director of digital asset strategy and development at the IRS, said.&nbsp;



The hope is the new system will help educate taxpayers about what transactions are taxable and make compliance easier. Fingers crossed that it’s a smooth transition, but we do not envy you, CPAs.



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Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.



Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. <a href="https://blockworks.co/newsletter/onthemargin">Subscribe to the Forward Guidance newsletter</a>.



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New year, new tax form 

Ben Strack

This is a segment from the Forward Guidance newsletter. To read full editions, <a href="https://blockworks.co/newsletter/forwardguidance">subscribe</a>.



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Holiday celebrations transpired the last few days. But the week was also marked by MicroStrategy becoming part of the Nasdaq 100.&nbsp;



While some thought this would offer the company’s stock price a short-term lift, that so far hasn’t been the case. As of 1 pm ET, MSTR’s share price was down 22% since the market opened on Dec. 16 (after the index inclusion <a href="https://blockworks.co/news/will-mstr-enter-nasdaq-100">news</a> late the prior Friday).



End-of-year profit-taking (MSTR is up ~380% in 2024) and recent declines in BTC price are likely contributors to MicroStrategy’s latest price dip.



But the bigger picture? Significance of MSTR’s inclusion in the index, analysts note, stems from the massive funds that allocate to the Nasdaq 100 constituents — namely Invesco’s QQQ, an ETF that manages $325 billion in assets. “More to the point, it’s acceptance,” Dan Weiskopf, co-portfolio manager of Amplify’s BLOK ETF, <a href="https://blockworks.co/news/2025-crypto-stocks-to-watch">told me</a> last week. “It’s institutional adoption. It’s an example of [Michael Saylor’s] <a href="https://blockworks.co/news/microstrategy-mstr-stock-btc-performance">strategy</a> <a href="https://blockworks.co/news/bitcoin-salesmen-michael-saylor-larry-fink">working</a>, candidly.”



The question for 2025 is whether MSTR could also land itself in the S&amp;P 500. Bigger than QQQ, the SPDR S&amp;P 500 ETF (SPY) — with $636 billion in assets — invests in the companies within that index.



Weiskopf called this possibility within the next year “a reach,” but believes it’s inevitable.&nbsp;



Benchmark’s Mark Palmer noted that while MicroStrategy easily meets the minimum market cap and trading volume, it needs positive earnings for the most recent quarter and combined positive earnings for its last four quarters.



MSTR’s plan to adopt new FASB guidance on how BTC on balance sheets is accounted for would position it to begin reporting positive earnings as soon as Q1, Palmer added.



People are clearly noticing the trend of more companies <a href="https://blockworks.co/news/company-treasuries-btc-reserve-asset">holding BTC</a> as a treasury asset. Just ask asset manager Bitwise, which yesterday <a href="https://www.sec.gov/Archives/edgar/data/1928561/000121390024112714/ea0225863-02_485apos.htm">proposed</a> a Bitcoin Standard Corporations ETF.



The planned offering would invest in companies with market caps above $100 million that hold at least 1,000 BTC in their corporate treasury.



MSTR obviously fits that criteria (444,262 BTC). So too do a bunch of the <a href="https://blockworks.co/news/btc-miners-spending-strategies">bigger bitcoin miners</a>, like Marathon Digital (44,394 BTC as of Dec. 18), Hut 8 (10,096 BTC), Riot Platforms (17,429 BTC) and CleanSpark (9,297 BTC).



Elsewhere, Metaplanet <a href="https://contents.xj-storage.jp/xcontents/33500/83ccb67f/4ee2/4f76/a2c8/dbeaed64901f/140120241223542705.pdf">revealed</a> a buy of roughly 620 BTC on Monday, bringing its total holdings to about 1,762 BTC. 



Others — like KULR Technology Group, with an initial <a href="https://x.com/KULRTech/status/1872315740470329785">buy</a> of 217 BTC yesterday — are working their way up.



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Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.



Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. <a href="https://blockworks.co/newsletter/onthemargin">Subscribe to the Forward Guidance newsletter</a>.



Get alpha directly in your inbox with the <a href="https://blockworks.co/newsletter/research">0xResearch newsletter</a> — market highlights, charts, degen trade ideas, governance updates, and more.



The Lightspeed newsletter is all things Solana, in your inbox, every day. <a href="https://blockworks.co/newsletter/lightspeed">Subscribe to daily Solana news</a> from Jack Kubinec and Jeff Albus.

MSTR check-in, ‘Bitcoin Standard’ ETF filing

Donovan Choy

This is a segment from the 0xResearch newsletter. To read full editions, <a href="https://blockworks.co/newsletter/research">subscribe</a>.



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<h2 class="wp-block-heading">Pendle</h2>



Pendle exists because crypto wants to speculate.&nbsp;



In Pendle’s short history, the team has constantly reiterated its yield trading product using narratives from stablecoins and infamous “DeFi 2.0” (<a href="https://blockworks.co/news/defi-future-nirvana-hack-risk">Olympus DAO</a>) in the 2021 bull, to liquid staking tokens, real-world assets on Arbitrum, and liquid restaking during the prolonged bear.



It wasn’t until the points meta blew up in early 2024 that Pendle struck gold, with its TVL shooting up from the multi-million to multi-billion dollar range. Pendle’s Principle Tokens (PT) and Yield Token (YT) yield mechanisms remain an indispensable tool for anyone looking to perform any form of leveraged points or fixed yield farms.



<h2 class="wp-block-heading">Fluid</h2>



<a href="https://blockworks.co/news/defi-superapp-competitor-to-aave-uniswap">Fluid</a> is a picture-perfect example of what innovation looks like. Fluid took many of DeFi’s successful primitives, such as Uniswap v3’s concentrated liquidity and Aave’s utilization rate curves, then redesigned traditional AMM liquidity provisioning from the ground up.&nbsp;



With its “smart debt” and “smart collateral” mechanisms, Fluid enables deep multi-million dollar DEX <a href="https://fluid.instadapp.io/stats/1/dex">liquidity pools</a> that are, technically speaking, $0 in TVL. This capital efficiency was an ingenious combination of users’ debt from lending protocols and AMM liquidity pools.



<h2 class="wp-block-heading">Ethena</h2>



Stablecoins are some of the hardest sectors to compete in. That makes USDe’s $6 billion market cap achievement very impressive — all within the span of a year.



Previous stablecoins built along the spectrum of centralization (<a href="https://blockworks.co/news/tether-prints-100-billionth-usdt">USDT</a>) vs. scalability (<a href="https://blockworks.co/news/maker-meeting-stablecoin-dai-demand">DAI</a>). <a href="https://blockworks.co/news/lightspeed-newsletter-ethena-solana-integration">Ethena</a> instead put together a series of impressive business development deals with CEXs and designed USDe, a scalable stablecoin that exploited the arbitrage in CEX-DEX perps funding rates and delivered yield to users.



<h2 class="wp-block-heading">GEODNET</h2>



For GPS technology to work well at centimeter-level accuracy, traditional companies deploy thousands of real-time kinematic (RTK) networks, like base stations and mobile rovers, globally.



Using crypto token incentives, GEODNET sought to scale the deployment of RTK networks. Based on November data, GEODNET has already deployed at least 10,000 stations across 140 countries, surpassing the 5,000 stations put together from traditional providers Trimble and Hexagon.



Notably, GEODNET has found a significant cost advantage. Deploying a base station with GEODNET is about $700, or 97% cheaper than legacy costs of $25,000. If that’s not innovation, I don’t know what is.&nbsp;



For more, see Blockworks Research’s free <a href="https://app.blockworksresearch.com/research/geodnet-enabling-ubiquitous-autonomy">report</a> on GEODNET.



<h2 class="wp-block-heading">Virtuals</h2>



Virtuals is the premier “picks and shovel” play of the recent <a href="https://blockworks.co/news/ai-agent-crypto-innovation">AI agent frenzy</a>.&nbsp;



It’s an AI agent factory that lets anyone spawn a tokenized AI agent. Similar to pump.fun, the agent’s native token is bonded to a DEX liquidity pool (Uniswap v2) once the criteria of a $420k market cap is met.



Built on Base, Virtuals has spawned at least <a href="https://dune.com/hashed_official/fun-virtuals-io">12,000</a> AI agents since its inception, including the wildly popular anime bot <a href="https://x.com/luna_virtuals">Luna</a>, which runs 24/7 and can be tipped with the agent’s respective token.



Virtual’s innovation comes from a combination of many different pieces including LLM models, crypto wallets, innovative value accretive tokenomics, NFTs and IPFS for data storage. 



For more, see this comprehensive post from <a href="https://www.chainofthought.xyz/p/virtuals-protocol-tokenising-ai-agents">Chainofthought</a>.



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Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.



Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. <a href="https://blockworks.co/newsletter/onthemargin">Subscribe to the Forward Guidance newsletter</a>.



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Crypto’s greatest app innovations in 2024

Katherine Ross

This is a segment from the Empire newsletter. To read full editions, <a href="https://blockworks.co/newsletter/empire" target="_blank" rel="noreferrer noopener">subscribe</a>.



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We’ve written about some pretty bullish calls on Empire (some of which you’ll find below). Why not keep that trend going?&nbsp;



So far this year, crypto venture capital looked a lot like a roller coaster. Third-quarter activity was slightly down, PitchBook’s Robert Le told me, but that could be associated with the summer lull.&nbsp;



“There was a lot of momentum and positive sentiment at the beginning of the year, and then … around the summer time … there was a slowdown in investments. And I think the thing with … the crypto native VCs who are supposed to … only invest in crypto, they really slowed down their investments. They didn&#8217;t really pick up their investments, even the ones that have, you know, a lot of dry powder in their funds,” Le said.



After the election, however, it seems activity has picked back up. Unfortunately, though, we don’t have the data yet to back up that observation. But Le thinks that, based on anecdotal evidence, we could see an uptick in this final quarter.&nbsp;



Now here’s the really juicy part: Le thinks we could be in for quite a year in venture activity. His prediction is that we could see over $18 billion in venture investments, with “multiple $5 billion quarters.”



Let’s just put that figure in perspective: 2023 overall saw roughly $9 or so billion. This year’s shaping up to look like it’ll land something around $11 billion, if not slightly over. Of those totals, we saw between $2 billion and $2.5 billion per quarter, Le added.&nbsp;



And part of that is going to come from the generalist VC firms, which he expects to come back to crypto next year.&nbsp;



As for some specific areas prime for investment, Le thinks that the crypto x AI narrative will stay hot after taking off earlier this year.&nbsp;



He admitted that he initially thought the crypto x AI narrative was just a mishmash of buzzwords. But the use cases this year have convinced him that there are real business applications there.&nbsp;



“As the AI ecosystem grows bigger … some of the glaring issues you see in AI become more obvious. And when that happens, you&#8217;re going to see opportunistic crypto companies come in and say, ‘Look [this is the] crypto answer to this AI” problem, Le said.



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Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.



Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. <a href="https://blockworks.co/newsletter/onthemargin">Subscribe to the Forward Guidance newsletter</a>.



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Crypto venture capital could hit more than $18B in 2025

This is a segment from the Lightspeed newsletter. To read full editions, <a href="https://blockworks.co/newsletter/lightspeed">subscribe</a>.



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Roughly a month ago, SOL set a <a href="https://blockworks.co/news/solana-sets-all-time-high-of-263">new all-time high</a> at $263.&nbsp;



Since then, it’s been down-only for the asset, which retraced all the way below $190.&nbsp;



The 25% slide knocked Solana down a couple of rungs on the cryptocurrency leaderboard. SOL is now the sixth-largest cryptoasset by market capitalization, trailing bitcoin, ethereum, tether, ripple and BNB. Some have pointed to the flashy new exchange Hyperliquid as a SOL competitor, but other market watchers say Solana is likely to keep running after a slight drawdown.



For context, all cryptos have had a rough week after the most recent FOMC meeting somehow left investors feeling <a href="https://blockworks.co/news/market-reaction-to-fed-rate-cut">bearish despite another rate cut</a>.



Still, of all the major tokens experiencing a Santa slide, SOL showed “particular weakness,” FalconX head of research David Lawant wrote on Friday. Memecoins like SHIB and DOGE performed even worse, perhaps indicating that the more volatile the crypto, the harder it fell. While SOL is far from a memecoin, it is certainly higher-beta than BTC or ETH. That hasn’t stopped XRP and BNB from rallying past Solana however.&nbsp;



Solana investors may partly be pricing in a $2.1 billion SOL token unlock that’s <a href="https://solana.messari.io/token-unlocks">slated</a> for March 1, 2025 and could put downward pressure on the asset if the unlocked tokens are sold.&nbsp;



SOL’s price may also be struggling due to a newfound competitor in Hyperliquid peeling away some investors, Quai Network co-founder Alan Orwick said. Hyperliquid is a decentralized-ish layer-1 and crypto exchange focused on perpetual futures trading. Its HYPE token airdrop earlier this month was <a href="https://blockworks.co/news/hyperliquid-most-valuable-airdrop">one of the largest</a> in crypto history. HYPE is already the 25th-largest crypto token by market cap.&nbsp;



Because Hyperliquid is very fast, some have started <a href="https://x.com/0xSisyphus/status/1870304736580149330">calling</a> it a better version of speed-focused Solana — although its momentum has stalled somewhat in recent days amid speculation that North Korean hackers are <a href="https://blockworks.co/news/hyperliquid-security-fuels-decentralization-concerns">plotting an exploit</a> of the blockchain.



Orwick added that a pro-crypto Trump administration and potential SOL ETF approval could be bullish for the asset next year.&nbsp;



Plus, there are always memecoins.



The launchpad and major driver of Solana onchain activity pump.fun “probably won’t get shut down by the Feds until 2028,” CFX Labs co-founder and CEO Nick Chicago said. “Wouldn’t be surprised to get major brands doing memes.”



Chicago was bullish for anecdotal reasons as well: His mother-in-law, who typically buys cryptos at the very top, “has not deployed yet.”



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Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.



Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. <a href="https://blockworks.co/newsletter/onthemargin">Subscribe to the Forward Guidance newsletter</a>.



Get alpha directly in your inbox with the <a href="https://blockworks.co/newsletter/research">0xResearch newsletter</a> — market highlights, charts, degen trade ideas, governance updates, and more.



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SOL’s market cap slips amid bearish December

This is a segment from the Forward Guidance newsletter. To read full editions, <a href="https://blockworks.co/newsletter/forwardguidance">subscribe</a>.



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Stocks traded sideways — stalling their pre-Christmas rally — and cryptos dipped Thursday, making one of the final trading days of the year a relatively quiet one.&nbsp;



The S&amp;P 500 was down 0.06% and the Nasdaq Composite gained 0.02% at 2 pm ET. Bitcoin and ether were down 3% and 3.8%, respectively, over the past 24 hours at that time.&nbsp;



The post-holiday moves came as investors unpacked one of the only economic data reports of the week: initial jobless claims.&nbsp;



There were 210,000 first-time filers for the week ended Dec. 21, marking a slight decrease from the week prior and coming in lower than median expectation of 224,000. Continuing claims, however, came in at 1.9 million, slightly higher than the anticipated 1.88 million.&nbsp;



The mixed report did not budge odds of an interest rate cut from the Fed next month. Fed funds futures markets on Thursday called for a 91% chance central bankers hold rates on Jan. 29, per <a href="https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html?redirect=/trading/interest-rates/countdown-to-fomc.html">data</a> from CME Group.&nbsp;&nbsp;



“One factor that pressures equities is the behavior of the fixed income market,” Pepperstone research strategist Quasar Elizundia said. “The continued rise in bond yields, driven by the reassessment of less restrictive monetary policy expectations, creates some concern.”&nbsp;



Stocks are going to face additional headwinds, Elizundia added, given that investors seem certain interest rates in 2025 will not fall as much as previously anticipated.



On the crypto front, the real market-movers in 2025 are likely to revolve around <a href="https://blockworks.co/news/sec-potential-shift-enforcement-actions">regulatory</a> <a href="https://blockworks.co/news/republican-nominees-for-house-committees">news</a>. New <a href="https://blockworks.co/news/sec-chair-nominee-crypto-past">leadership</a> at the SEC and CFTC, combined with a Republican-majority Congress and campaign promises from President-elect Donald Trump, could set the stage for a <a href="https://blockworks.co/news/crypto-new-age-in-2025">breakout</a> in the first half of the new year.&nbsp;



Still, though, it would be foolish to count out the role macroeconomic conditions and monetary policy have on crypto prices, so we’d suggest keeping an eye on just about everything (or at least your inbox) next year.&nbsp;



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Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.



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2024’s market ends on a sleepy note

Felix Jauvin

This is a segment from the Forward Guidance newsletter. To read full editions, <a href="https://blockworks.co/newsletter/forwardguidance">subscribe</a>.



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I sit reflecting on the year and what has transpired, especially in relation to the recent FOMC meeting that surprised hawkish and <a href="https://blockworks.co/news/market-reaction-to-fed-rate-cut">shocked markets</a>. Over one year it felt like we’ve been through five different versions of the Fed.&nbsp;



In the winter of 2024, the Fed got spooked by surprisingly elevated inflation prints in the first quarter. This led them to reverse their dovish inclinations they had set up in the fall of 2023. Then, in June, the FOMC surprised the market with a <a href="https://blockworks.co/news/forward-guidance-newsletter-economy-doing-fine">hawkish dot plot</a> that implied hardly any cuts in 2024.&nbsp;



Then, a <a href="https://blockworks.co/news/july-disappointing-jobs-report">concerning</a> jobs report in August flipped the entire narrative on its head. The Fed became concerned about a growth scare and losing the labor market, and once again flipped dovish, climaxing in a September <a href="https://blockworks.co/news/on-the-margin-newsletter-interest-rate-cut">cut of 50bps</a> to kick off the rate-cutting cycle. We’ve now had 100bps of cuts and the Fed has once again flipped hawkish. The outlook for 2025 is uncertain, with a forecast of only two cuts occurring next year.&nbsp;



If that all sounded like a rollercoaster of confusion, trust your instinct —&nbsp;it was.



Now, with January priced for a pause and no meeting in February, I’m once again expecting another flip-flop as we head into the new year. Additionally, I see the potential for more cuts than what is currently expected in 2025 to be priced in during the first quarter.



So as we head into the new year, I give you my parting thoughts: Expect to continue hearing the noise of flip-flops in the distance.&nbsp;



Enjoy the holidays and see you in 2025!



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Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.



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Recapping the Fed flip-flop of 2024

This is a segment from the 0xResearch newsletter. To read full editions, <a href="https://blockworks.co/newsletter/research">subscribe</a>.



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Predicting the top of a crypto market cycle is as much an art as it is a science.



There’s your Uber driver inquiring about the latest dog coin, a noticeable increase in dodgy celebrity crypto projects, or that cousin you see once a year at Thanksgiving sliding into your DMs for crypto advice.



Here are five tools crypto investors turn to when they dust off the crystal ball every four years. It goes without saying that none of this historical data is a definite guarantee for the future.



<h2 class="wp-block-heading">Bitcoin halving</h2>



Any discussion about crypto cycles is not complete without reference to the quadrennial <a href="https://blockworks.co/tag/bitcoin-halving">Bitcoin halving</a> event.&nbsp;



Every approximate four years, the Bitcoin network halves its reward emissions. The latest halving saw network <a href="https://blockworks.co/news/bitcoin-halving-2024-occurs">emissions halved</a> from 6.25 to 3.125 BTC.



The halving is the centerpiece of crypto cycles because it has come to be a signal for the beginning of greed and speculation in crypto markets. Importantly, each cycle has tended to peak around 12-18 months after the halving:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXeHtI8s_95DPGmqFCu6ki_ExsTs9o0XaJDbPUE4JJkQ2fyu188P1k1rfUTmNZNfwFqYzlVs5IAsWSYVTPHoQZZEOdZ_NoaSeJ_h2y_2pJraNAoJfSx1fe0WHgH3ORweP05XRWZX_A?key=4g3ijPe9gvLQaFQj29sadueS" alt=""/></figure>



We are eight months into the latest halving in April 2024, and if history is a reliable indicator, the 2024 cycle still has ways to go.



<h2 class="wp-block-heading">Google search for ‘bitcoin’</h2>



Hardly a week goes by in the crypto bull market without this chart surfacing on Twitter. It’s a brain-dead simple indicator: Retail wants to keep up to date, and bitcoin is the go-to Google keyword for doing so.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXcezM_gtS1XOmDLiifWWWt2tapiH7M11h3cXcuw3gyLiMXdPBqluHbItviYOfOZyki5xljqnXfClQYr2Iq8X57SNPT7WfuDa_sje1r1zju4EK-cyO7jTQoFF6YSuhJj736SQJL9KA?key=4g3ijPe9gvLQaFQj29sadueS" alt=""/><figcaption class="wp-element-caption">Source: <a href="https://trends.google.com/trends/explore?date=today%205-y&amp;geo=US&amp;q=bitcoin&amp;hl=en">GoogleTrends</a></figcaption></figure>



The last peak in bitcoin search interest was in mid-May 2021, about six months before the price of bitcoin actually did top out.



<h2 class="wp-block-heading">Pi Cycle Top indicator</h2>



The Pi Cycle Top is a quantitative measure of bitcoin’s price on two moving averages: 111-day and 350-day (multiplied by two).



Subscribers to the Pi Cycle Top indicator believe the cycle top is in when the former crosses the latter. This has happened with fair accuracy in <a href="https://blockworks.co/news/bitcoin-bull-market-drawdowns">past</a> bull cycles in 2013, 2017 and 2021.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXeMXSWepM9-uTUrN5sK05Jp7YdoTjMzzBj1oy_OUR1oyNBfVrAlg9s6vhX4A52GHtYO2PxNPt4CAclhF1lcWCS9hdtHdVhvQGbxySuIOPuzZwGe3A3bNO-M6iVQlZpUsqZhFFii?key=4g3ijPe9gvLQaFQj29sadueS" alt=""/><figcaption class="wp-element-caption">Source: <a href="https://x.com/CryptoCon_/status/1866949795924832640">CryptoCon</a></figcaption></figure>



The indicator rests on a key premise: The end of a bull market is near when everyone and their mom is thinking of getting their hands on the orange coin. This market euphoria drives prices to unsustainable levels above “normal” growth trends, which causes bitcoin prices in the short term to significantly deviate from the long term.



<h2 class="wp-block-heading">App Store rankings</h2>



Premise: First-timers are using Coinbase rather than Uniswap to ape into cryptocurrencies. Implication: When Coinbase ranks highly on App Store rankings, the top of the cycle is near.



Simple enough?



It’s a nifty qualitative measure of crypto sentiment, and there are whole Telegram groups dedicated to just tracking it. In the last week, Coinbase has ranged from 66th to 135th.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdJvgZqCACVMSaSnhs-ZLOKXVR1Lm9enWBl8vU0X6vYAfRgpmX2qM0iPkajfAx6HqziOfDVhWBuz24wubNA6RzECDrc2kmbf_UsZIs-oaeWBVC0FYUw5HMpSy_5vaDz4QS2rz8_?key=4g3ijPe9gvLQaFQj29sadueS" alt=""/></figure>



With Solana in the limelight again, a popular derivative of this measure has been the Phantom Wallet ranking. The prevailing idea is similar: Retail loves Solana memecoins, so they’re all downloading Phantom on their phones to trade them.



The big assumption with this measure is that crypto investing is still largely untouched by the mainstream, and with every cycle comes a new wave of retail investors that have never installed centralized exchange apps. If crypto is already “mainstream,” this measure loses its relevance.



<h2 class="wp-block-heading">ETH:BTC ratio</h2>



Ah, the revered ETH:BTC ratio that podcasters and investors cannot help constantly obsessing over.



Here’s the idea: Investors buy bitcoin in the early innings of the crypto cycle. Unsatisfied with profits from the orange coin, they soon “rotate” into riskier altcoins, which spikes the ETH:BTC ratio.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXfP_e-3uAEuXj9WCvHpHzfS0bk2qNkZRsZkHbMniv0O96r2MnHhU1ML7l61zkGFcE_o6WA_sXxwfQAGpCg2jf3iQB7V6AHr9iCkjJIgZFXr4Ims5JBRGWQ_xpeSX2wI-f4q6Ul4Vw?key=4g3ijPe9gvLQaFQj29sadueS" alt=""/><figcaption class="wp-element-caption">Source: <a href="https://www.tradingview.com/symbols/ETHBTC/">TradingView</a></figcaption></figure>



With ETH’s sentiment currently in the <a href="https://blockworks-research.beehiiv.com/p/sentiment-ethereum-tracking-price">gutter</a>, ETH:BTC has become a measure of questionable value this cycle. ETH:BTC is currently at a depressing low of 0.034. For context, ETH:BTC peaked at 0.075 in 2022, and 0.0109 in 2018.



If history repeats itself, expect markets to crash when ETH:BTC nears its tops.



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Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.



Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. <a href="https://blockworks.co/newsletter/onthemargin">Subscribe to the Forward Guidance newsletter</a>.



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The art of predicting the top of a crypto cycle

This is a segment from the Empire newsletter. To read full editions, <a href="https://blockworks.co/newsletter/empire">subscribe</a>.



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We all know it’s lame to live in the past.&nbsp;



It’s cringe when middle-aged dadbros bring up their high school football “careers,” and we shake our heads when our moms drone on about their college semesters abroad in Europe (it’s always Italy).



But now it’s my turn.



Lighting Network was the best thing that has ever happened to Bitcoin — until it wasn’t.



A refresher: Lightning is a proposed layer-2 solution for enabling super fast (almost instant) and cheap BTC transfers.&nbsp;



Usually, it takes about an hour on average for bitcoin transfers to be fully confirmed. Standard practice says that a transaction is only settled when it’s six blocks deep in the chain, and blocks arrive every 10 minutes or so.



Instead, Lightning Network allows two users to open a payments channel between them, and only the first and last transaction in that channel actually makes it to the Bitcoin blockchain.&nbsp;



Everything else in between then becomes just a matter for the two parties — so no need to wait for any confirmations at all, beyond the offchain tallies displayed by the Lightning app being used.



Anyone who’d entered crypto in the past three years might only really know Lightning from El Salvador’s monumental adoption of bitcoin as legal tender in September 2021.



The official government Chivo app and other payment processors like OpenNode used Lightning as their backbone. This meant many regular Salvadorans were suddenly converted into Lightning users, even if they didn’t fully know it.



The <a href="https://www.coindesk.com/layer2/2022/09/15/one-year-of-bitcoin-in-el-salvador-the-bad-the-good-and-the-ugly">rollout</a> was not without problems. And while Lightning <a href="https://bitcoinvisuals.com/lightning">capacity</a> had been on the rise in the leadup to El Salvador’s adoption, the amount of bitcoin bouncing around channels still jumped almost 40% in the following three months, from under 2,400 BTC to 3,300 BTC.



These days, there’s closer to 5,000 BTC ($500 million with BTC at $100k), but growth has stagnated in the past two and a half years.&nbsp;



The real kicker is that Lightning was so much more fun and relevant when there was less than 1,000 BTC on the network. When silly micropayment gimmicks ran free.



Between late 2018 and early 2019, a <a href="https://bitcoinmagazine.com/business/playing-layer-2-satoshis-games-brings-lightning-next-level">proliferation</a> of experimental apps captured imaginations. There were Miniclip-style gaming portals like Satoshi’s Games, as well as a Mario clone “Super Bro” that transformed every in-game coin into a collectible sat.



Those were great. But none held a candle (or even a <a href="https://www.coindesk.com/markets/2019/02/05/bitcoins-lightning-torch-explained-what-it-is-and-why-it-matters">Lightning Torch</a>) to two in particular:&nbsp;



<ul class="wp-block-list">
<li>Pollo.feed, which <a href="https://thenextweb.com/news/feed-chickens-using-bitcoin-blockchain">allowed</a> you to feed actual live chickens remotely for just a few sats while you watched via livestream. Magic internet money was instantly physical.</li>



<li>Satoshi’s World would let you traverse Google Earth, tagging it with whatever nonsense graffiti you’d like — and visible for all the other digital travelers to see (I <a href="https://thenextweb.com/news/bitcoin-graffiti-amsterdam">tagged</a> Amsterdam Central Station with “LONG BITCOIN, SHORT THE BANKERS”).</li>
</ul>



It’s okay that Bitcoin is more serious these days. But it’s also not.



The internet was absolutely better when we were all doing dumb stuff on the Lightning Network. Sadly, we’ll probably never make it back.&nbsp;



Now, who’s ready to hear about that time I hit a full-court touchdown?



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Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.



Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. <a href="https://blockworks.co/newsletter/onthemargin">Subscribe to the Forward Guidance newsletter</a>.



Get alpha directly in your inbox with the <a href="https://blockworks.co/newsletter/research">0xResearch newsletter</a> — market highlights, charts, degen trade ideas, governance updates, and more.



The Lightspeed newsletter is all things Solana, in your inbox, every day. <a href="https://blockworks.co/newsletter/lightspeed">Subscribe to daily Solana news</a> from Jack Kubinec and Jeff Albus.

Glory days: Why we can’t forget Lightning Network

Jeff Albus

This is a segment from the Lightspeed newsletter. To read full editions, <a href="https://blockworks.co/newsletter/lightspeed">subscribe</a>.



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What better way to celebrate the season than by diving into the holly-jolly madness of holiday memecoins?&nbsp;



Pump.fun has been brimming with festive chaos as degens deck the chain with memes and mayhem, so we thought we’d take a moment to unwrap a few of the highlights.



First up, the Santas. Purple is the color of the moment, and Santa is <a href="https://pump.fun/coin/9SDLazy9LtGqqVtP42pgpkGhe3hzCXyfmhSqkXrUpump">apparently</a> taking it in stride. Santa Paws (yes, a cat) appears to be attempting to <a href="https://pump.fun/coin/Ad2REW1U4Y4e4uk6NbKo3HTMVVWxiakardqeCixW5G5a">claw</a> its way to a comeback, while Santa Is Real and Santa Isn’t Real <a href="https://pump.fun/coin/BctT5QCB17dDThQHSc4SHkibmTpFjqpFNY5PMXgppump">duke</a> it <a href="https://pump.fun/coin/BnmT8S7tf4ugPbHQPQwMciebA37PRsmRLUFBe8yJpump">out</a> for festive dominance. Santa wif Hat, meanwhile, is <a href="https://pump.fun/coin/qWxddh85CHDErES6z9crApan64quFd5rdFvLJrApump">rocking</a> an alarming variety of headgear, from classic red to…let’s just call it “experimental.” And what’s this? Could it be a brigade of naked Santa variants storming the chain, ranging from <a href="https://pump.fun/coin/5BZbV7Medi8M9Uh9jhgDWmyvuhPWVcHhbiUHgL4Jpump">cheeky</a> to full-on yuletide <a href="https://pump.fun/coin/8VZgcDXipKiw9abo7xzBhkCBDayid9fdnNBJhM8tpump">nightmare fuel</a>? Aw thanks, frens…you really shouldn’t have.



New holidays are making their debuts too. Ever heard of <a href="https://pump.fun/coin/6Ny7MWJHsfUZjGXpGp6oBE7GbZiL2omoNsmcpM1Spump">Rizzmas</a>? <a href="https://pump.fun/coin/GWedrsv8XtWrULEBUpPGnD1kLVK4sCLpP6j7DC28pump">Hawktuahnukkah</a>? <a href="https://pump.fun/coin/7nh8Jt94taUKjaPS7whDMMhptJv7JuVxwBwVdaLjpump">Chrismahanukwanzaka</a>? Me neither, and yet here we are. Degens have made their wish lists <a href="https://pump.fun/coin/EUEqFFL5RSAcFesDDTKnaTdc8xr1FjeDHDcEsPGNpump">loud</a> and <a href="https://pump.fun/coin/4e6dMZqR6g35LZt6JRmNxmMv23obCY79ugyAH8tbpump">clear</a> with aspirational coins like “All I Want for Xmas is (1000X)” and “AllIWANTforXmasIsAMillionBucks.” Ho ho hodl. Oh, and the snowmen…my goodness, the snowmen. They’ve outdone themselves. Frosty the Dough Man — because nothing says “the season of giving” like <a href="https://pump.fun/coin/Gw6ma4qYuVVoh5nJwRyNe6RReQifhPAyb6FaCVEHpump">hoarding</a> bags of cash — is joined by the very <a href="https://pump.fun/coin/4k9312MFLHfesDKJsvBuav5V6PhLpNQnKJk4T75Epump">swol</a> Abdominal Snowman (you read that right), an alarmingly handsome-Squidward-esque <a href="https://pump.fun/coin/DqtMxZrb1xPaQ3c4i91KmuMd1Te2Unz66HBTYJ6ipump">Mewing</a> Snowman, and the ever popular extra <a href="https://pump.fun/coin/BGTD6zabrU8JJLVc4UqcjYLkVgL8YyKRohGNrFjCsLdX">thicc</a> Gyatt Snowman, among <a href="https://pump.fun/coin/F7JH44xQfPs68aanfMmkMmiTiP1wdkpJ2rGwMcrspump">many</a>, <a href="https://pump.fun/coin/7GsA6qpzN4betGAxKbLy9rQQyA93wbuYMKJi7HNUpump">many</a> <a href="https://pump.fun/coin/4zWYsX4H8zxqYePxinujqdfefNV6eggQRt2Gxokkpump">others</a>.



It only gets weirder. There are memecoins featuring <a href="https://pump.fun/coin/4R5V41w48QBQPZzsiC1rTY8suwR5QAN6okF4cGSSpump">homicidal</a> Christmas trees, an unfortunate P. Diddy <a href="https://pump.fun/coin/6YhZH5n535JQtvr2gtaSdG7d7CaG5LE8uhZyvtZpump">made</a> of gingerbread, Biden and Trump (both dressed as Santa) <a href="https://pump.fun/coin/Kd1LyKjL1FzC2753DL2xAchZ5H4CtR3axeiDacdpump">kissing</a> under the mistletoe, and a truly <a href="https://pump.fun/coin/JCDPZiVgphpcPTPCSqPcpcYf74kXpNCt6RKsLpdSpump">inexplicable</a> Jesus made of shrimp (called Shresus, obviously).



And then there’s the Grinch. Solana devs can’t get enough of Dr. Seuss’ <a href="https://pump.fun/coin/BaoNW4ydc7QBwCzdRNSumftiWoqo8PX3q3cahbLJpump">iconic</a> green grouch. Grinch Mona Lisa? <a href="https://pump.fun/coin/Gi7qCJZdwe6UDqvvuBqKdReFknAGgdWZfzERsecepump">Check</a>. Super Saiyan Grinch? <a href="https://pump.fun/coin/A5tpN8MvyKDkTysw8gd8cdziGsxTqhMLfBGGE8Jgpump">Why not</a>? Grinch Hawktuah? <a href="https://pump.fun/coin/8GVnJfdtw1wZqpsyWe75wueqVErtts3j1GXo36T3pump">Sure</a>. If it’s a meme, it’s minting. Finally, if the cold weather is keeping you from touching grass, don’t worry — you can always <a href="https://pump.fun/coin/EyfuBVZPrXEvpvc3fC4CTQ4xTgWfbHH8dLijaz22pump">Touch Snow</a>.



From all of us at Lightspeed: Happy holidays, Solana fam!



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Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.



Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. <a href="https://blockworks.co/newsletter/onthemargin">Subscribe to the Forward Guidance newsletter</a>.



Get alpha directly in your inbox with the <a href="https://blockworks.co/newsletter/research">0xResearch newsletter</a> — market highlights, charts, degen trade ideas, governance updates, and more.



The Lightspeed newsletter is all things Solana, in your inbox, every day. <a href="https://blockworks.co/newsletter/lightspeed">Subscribe to daily Solana news</a> from Jack Kubinec and Jeff Albus.

Holiday memecoin mayhem!

This is a segment from the Forward Guidance newsletter. To read full editions, <a href="https://blockworks.co/newsletter/forwardguidance">subscribe</a>.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Merry Christmas and Happy Hanukkah to those who celebrate. Kwanzaa kicks off tomorrow too.



While Santa’s elves worked hard in the holiday lead-up, bitcoin miners were busy raising money for different purposes.&nbsp;



We touched on this <a href="https://blockworks.co/news/bitcoin-miner-convertible-note-raises">phenomenon</a> earlier this month. Bitdeer noted proceeds from its convertible senior notes offering would go toward datacenter expansion and mining rig development. Marathon and Riot Platforms have signaled the route of using raised capital to buy more BTC.&nbsp; &nbsp;&nbsp;



More recent announcements from two other segment players continue to highlight that not all BTC miners agree on the best way to spend the capital they secure.



Less than a week ago, Hut 8 touted its purchase of 990 BTC for $100 million (avg. price of ~$101,710). Two days earlier, CleanSpark CFO Gary Vecchiarelli noted his company was choosing not to pay such a price for BTC.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">Very pleased to incorporate this instrument into our capital stack and strategy. Instead of buying bitcoin at prices over $100k, we are investing in our ability to mine bitcoin at a cost under $40k. <a href="https://twitter.com/search?q=%24CLSK&amp;src=ctag&amp;ref_src=twsrc%5Etfw">$CLSK</a> <a href="https://twitter.com/hashtag/Bitcoin?src=hash&amp;ref_src=twsrc%5Etfw">#Bitcoin</a> <a href="https://t.co/TZsn0jqayD">https://t.co/TZsn0jqayD</a>&mdash; Gary A. Vecchiarelli (@GaryVec) <a href="https://twitter.com/GaryVec/status/1869137584343150638?ref_src=twsrc%5Etfw">December 17, 2024</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



I followed up with Vecchiarelli. He told me the company is “laser focused on producing bitcoin from our mining operations at a significant discount to the spot price.” The marginal cost to produce each coin last quarter was roughly $36,250, he explained.&nbsp;



The company’s main 2025 growth priority is reaching a hash rate of 50 EH/s as soon as possible, while also growing its digital asset management group to manage its bitcoin treasury (9,297 BTC, as of Nov. 30).&nbsp;



As Hut 8 buys more BTC, Marathon Digital has used capital <a href="https://x.com/MARAHoldings/status/1869729480211664974">from convertible notes</a> to boost its BTC holdings to 44,394 BTC, as of Dec. 18.&nbsp;



“We are happy to be different [from] those companies,” Vecchiarelli said, adding that CleanSpark’s healthy margins allow the company to build its balance sheet holdings “in a durable fashion.”



Hut 8 CEO Asher Genoot made clear to me the company’s strategic bitcoin reserve is “a complement, not a substitute, to our core operating strategy, which prioritizes disciplined, fundamentals-driven growth.”



The miner doesn’t have explicit price levels at which it would totally rule out buying BTC, Genoot added — but is “extremely sensitive to valuation extremes and [optimizes] for risk-adjusted returns.”



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BTC miners spend differently — here’s why 

This is a segment from the Forward Guidance newsletter. To read full editions, <a href="https://blockworks.co/newsletter/forwardguidance">subscribe</a>.



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Starting next year, the SEC will operate with a smaller team of commissioners while we wait for the Senate to approve President-elect Donald Trump’s nominees.&nbsp;



SEC Commissioners Hester Peirce and Mark Uyeda, both Republicans, are the only sitting commissioners who will remain with the agency after Inauguration Day. After SEC Chair Gary Gensler <a href="https://blockworks.co/news/gary-gensler-resigning">departs</a>, how the agency approaches the crypto industry should see a <a href="https://blockworks.co/news/tokens-new-era-crypto-regulation">big shift</a>, according to Peirce.&nbsp;



“We have a big toolkit,” Peirce said earlier this month during an appearance at the Blockchain Association Policy Summit.&nbsp;



“We&#8217;ve always gravitated toward enforcement in this area as our tool of choice,” she added. “I think when you see new commission changes and the composition changes, then the mix of cases can change as well.”



The nature of federal agencies means that some — or most, in the SEC’s case — policy discussions happen behind closed doors, Uyeda added.&nbsp;



“That&#8217;s why we have the Administrative Procedure Act, to allow the public to comment on regulation,” he said. “That&#8217;s our accountability for the American public to provide that transparency.”&nbsp;



In cases where agency staff issue guidance that differs from SEC rules (for example <a href="https://blockworks.co/news/house-committee-resolution-against-sab121">SAB 121</a>), there is no public comment period.&nbsp;



In the case of SAB 121, both chambers of Congress elected to <a href="https://blockworks.co/news/senate-gensler-sec-overturn-sab-121">overturn</a> the policy, which states that digital asset custodians should report a liability and “<a href="https://blockworks.co/news/sec-staff-call-for-crypto-entities-to-show-liability-on-balance-sheet">corresponding assets</a>” on their balance sheets. President Biden ultimately <a href="https://blockworks.co/news/house-fails-to-override-anti-sab121-veto">vetoed</a> the resolution, however.&nbsp;



Uyeda looks forward to the agency providing more opportunities for public input.&nbsp;



“Writing the shift is hard because we are pretty far down this road,” Peirce said.&nbsp;



Addressing the crypto industry directly, she added, “this is going to require a lot of hard work from us and from you to get back on the right foot, but I think we can do it.”



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SEC commissioners say agency may move away from enforcement actions 

Macauley Peterson

This is a segment from the 0xResearch newsletter. To read full editions, <a href="https://blockworks.co/newsletter/research">subscribe</a>.



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For years, Bitcoin enthusiasts have clung to the narrative that some of its 21 million supply is irretrievably “lost,” forever locked in wallets with forgotten keys. These “lost” coins have been viewed as a permanent reduction in the circulating supply, making bitcoin even scarcer than its fixed cap implies. But what if that scarcity <a href="https://blockworks.co/news/bitcoins-21-million-limit-myth">isn’t as definitive</a> as we think?



The rise of quantum computing and breakthroughs in cryptographic techniques have sparked speculation that no bitcoin is truly “lost.” As computational power evolves, the security underpinning bitcoin’s oldest key pairs — generated using what may soon be outdated cryptography — could be compromised.



This isn’t an immediate concern, as Bitcoin developers are well-equipped to implement protocol upgrades that shield active wallets. However, wallets abandoned long ago — like Satoshi Nakamoto’s — and whose owners are unlikely to migrate them to new encryption schemes, could become targets.



Imagine quantum computing so advanced that “key miners” can derive private keys from public ones, effectively “cracking” these forgotten wallets. This would bring dormant bitcoin back into circulation — not through the intent of the original owners, but rather new actors exploiting advances on the periphery of technology.



Far from being FUD (fear, uncertainty and doubt), this idea reframes <a href="https://blockworks.co/news/bitcoin-billionth-transaction-network-evolution">Bitcoin’s evolution</a>. The network&#8217;s adaptability ensures it remains robust in a quantum future, but it also challenges the idea that its circulating supply will permanently exclude lost coins. As Nic Carter has noted, Bitcoin’s security model doubles as a $400 billion “bug bounty” driving quantum advancements.



The treasure hunting of old wallets might one day become a competitive market, reshaping the narrative of bitcoin’s scarcity. In this future, “lost” bitcoin doesn’t stay lost — it merely waits for someone to unlock it, keeping the promise of 21 million circulating coins intact.



Whether that promise itself can be kept in the future is also an open question, but that’s a topic for another day.



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The myth of ‘lost bitcoin’ in the age of quantum computing

“Next year is gonna really show everyday people what crypto is for,” Hashdex co-founder Bruno Caratori confidently told me last week.&nbsp;



And, no, he didn’t just mean bitcoin. He added that this next year could be the “dawning of the age … of a crypto beyond bitcoin.”



A lot of Caratori’s thinking comes from the fact that stablecoins have seen such a breakthrough to mainstream attention, as has a lot of the real-world asset offerings (if you include stablecoins in that mix, though I’m not so sure David would).



RWA onchain totals out at nearly $14 billion, with stablecoin value topping $200 billion&nbsp;



<figure class="wp-block-image"><img loading="lazy" decoding="async" width="1060" height="670" src="https://blockworks-co.imgix.net/wp-content/uploads/2024/12/image-8.png" alt="" class="wp-image-95535" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2024/12/image-8.png?w=1060 1060w, https://blockworks-co.imgix.net/wp-content/uploads/2024/12/image-8.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2024/12/image-8.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2024/12/image-8.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2024/12/image-8.png?w=407 407w, https://blockworks-co.imgix.net/wp-content/uploads/2024/12/image-8.png?w=413 413w, https://blockworks-co.imgix.net/wp-content/uploads/2024/12/image-8.png?w=346 346w, https://blockworks-co.imgix.net/wp-content/uploads/2024/12/image-8.png?w=80 80w" sizes="(max-width: 1060px) 100vw, 1060px" /><figcaption class="wp-element-caption">Here’s a look at total RWA value with stablecoins</figcaption></figure>



Caratori noted that stablecoins get an upper hand because they’re “easy enough” to understand.&nbsp;



If you were to ask Caratori for some predictions — and, dear reader, you best bet I did — he’d tell you that he thinks we could see “everyday transactions” in the US using stablecoins starting next year.&nbsp;



Part of this is due to the potential for Circle to enter the public markets in 2025. If you remember, we recently talked about <a href="https://blockworks.co/news/crypto-ipos-bringing-back-retail">what a Circle IPO could look like</a>.&nbsp;



If we see them enter the public stage, it’ll be the “most significant IPO in crypto since Coinbase.”



“This is a player that&#8217;s going to get a lot of notoriety. First of all, it&#8217;s going to get resources to invest in the ecosystem. And even what they&#8217;ve been doing so far, initiatives such as integrating into Stripe may be the major gateway for online commerce. [With] initiatives like these, they&#8217;ll just be better resourced with not just money, but the credibility that comes with establishing the relationships,” he explained.



If we see adoption across crypto, then Caratori thinks we could see the end of the boom-bust cycle. Controversial, I know.



“There&#8217;s this widespread consensus in crypto that it behaves in this four-year cycle, and that it&#8217;s been like this forever, and it&#8217;s going to continue to be like this. And that 2025 will be the year of exuberance, and that will inevitably be followed by a big 70-80% drawdown. I see how this was true before [but] I think that real adoption by governments, by big players — such as the BlackRocks of the world — [stabilize crypto].”



“So I don&#8217;t expect this to be a big exuberance and then a bust cycle after and again. The first applications are really going to become real for the public,” Caratori said.



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