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Fears of Silk Road BTC Selling Pressure |
For the outside world, bitcoin (BTC) dropping $10,000 to $92,000, in a matter of days could signal the end of the bull run. A caveat to this could be that bitcoin continues to consolidate below a key psychological $100,000 threshold. Unconfirmed reports from DB News suggest that the Department of Justice (DOJ) has been given the authority to liquidate 69,370 BTC ($6.5 billion) seized from the Silk Road marketplace. The report comes just 11 days from President-elect Donald Trump's inauguration. Trump has vowed not to sell any of the 187,236 BTC that is still in possession by the U.S. government, according to Glassnode data. The majority of the tokens in the government's possession comes from the seizures on Bitfinex and Silk Road. There are a few reasons that the fears of a sell-off may be overblown: The reports of 69,370 BTC being liquidated seem like a lot, and if sold, they will most likely be sold in an orderly fashion as they are requested to get the best possible price. At the same time, the market already knew that this was a possibility, so this could have already been baked in to market expectations. Secondly, the market has absorbed over 1 million bitcoin since September. This can be shown by the decrease in holdings by long-term holders, who are defined by Glassnode as investors who have held bitcoin for longer than 155 days. As a cohort they now hold 13.1 million BTC. However, since September, the price has gone from approximately $60,000 to over $100,000. The last reason is that we have previous data on another government selling a similar amount of bitcoin. The German government sold approximately 50,000 BTC from mid-June to mid-July of 2023. The total value of the coins was around $3.5 billion back then, around half the value now. |
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XRP Forecast to Surge on 'Trump Effect' |
Shifting regulatory tides in the U.S. and favorable price action could set up XRP for a 40% move higher in the near term.
Since hitting highs near $2.9 in early December, payments-focused cryptocurrency XRP has lost steam to carve out what is known as a "descending triangle" pattern in technical analysis. It is identified by a lower horizontal support line, representing consistent demand near a specific price level, and the declining upper trendline, representing shallower price bounces.
According to the CMT Association's theory and analysis of technical analysis, descending triangles often end with a downside break. However, bullish breakouts are more reliable and profitable, producing an average gain of 47% to 16%. “In other words, XRP could surge 40% or more if prices top the declining upper trendline, signaling a resumption of the preceding bull run from early November lows near 50 cents,” CoinDesk markets analyst Omkar Godbole states. “All bets are off if prices diverge from the pattern, moving below the horizontal support line near $2.00,” Godbole adds.
Social metrics are on a high note, too. A Wednesday report from sentiment tracking service Santiment said there is an “increased level of optimism from the crowd,” toward the token, based on social media posts and market commentary — higher than that for bitcoin (BTC) or ether (ETH).
Since Trump's election, XRP has seen its price surge by over 300%, outpacing other major cryptocurrencies. This surge is largely attributed to the expectation of a crypto-friendly policy environment under Trump, which includes easier regulatory pathways for local crypto businesses — such as Ripple Labs, the firm closely related to XRP.
The change in SEC leadership, particularly the exit of Gary Gensler, who has been seen as crypto-skeptical, could lead to a more favorable regulatory environment for XRP.
Ripple's CEO Brad Garlinghouse said last week that the incoming government ends years of regulatory limbo and opens up new domestic opportunities that previously "froze" under the old administration. |
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FTX Bankruptcy Team Hits Out at Sale |
The FTX bankruptcy estate has disputed the recently announced sale of FTX EU to Backpack, the cryptocurrency exchange and wallet firm founded by former FTX and Alameda employees.
The FTX estate said Backpack “has no involvement whatsoever in the U.S. Bankruptcy Court-approved process for returning funds to any FTX customers and other creditors,” and that a press release about the sale from Backpack on Monday was issued without the knowledge or involvement of FTX. Backpack had announced plans to pay back FTX EU creditors, as well as setting out how it plans to operate a regulated crypto derivatives service using the licenses acquired in the sale.
“Backpack has not been authorized by FTX to make any distributions to any FTX customers or other creditors, including any former FTX EU customers,” the FTX bankruptcy estate said in its statement.
In March of 2024, the FTX bankruptcy court approved the sale of FTX EU to Patrick Gruhn and Robin Matzke, the co-founders of Digital Assets, a firm acquired by Sam Bankman Fried in 2021; Gruhn and Matzke stayed on to lead FTX’s expansion into Europe.
In an attempt to clarify the situation, Backpack said it bought FTX EU from Gruhn and Matzke, a transaction that has also been completed and reflected on official public records since June 2024, and which has been approved by CySec, the Cyprus financial regulator. “As a licensed entity, the transfer of the FTX EU entity was subject to regulatory approval by CySec. In December 2024, CySec approved Backpack’s purchase following a lengthy diligence process. Following such approval, the FTX estate is obligated to transfer the shares as set out in the court-approved sales and purchase agreement. We look forward to the completion of the transfer so that, like the FTX bankruptcy estate, we can begin to return customer funds to former FTX EU customers,” Backpack said in a statement issued on Thursday.
FTX EU will be renamed to Backpack EU and Backpack EU will be solely responsible for redistributing former FTX EU customer funds, Backpack said. |
Gemini Appoints New EU Team |
Crypto exchange Gemini has appointed a new senior management team in Europe and plans to significantly expand its footprint in the region in 2025, the company said in a press release on Thursday. Mark Jennings has joined the company as its new head of Europe and Daniel Slutzkin has been appointed head of the U.K., Gemini said. Jennings was previously employed by rival exchange Kraken as its COO for European operations. Slutzkin joins from U.K. broker Stake.
Vijay Selvam has assumed the role of international general counsel, and will be based in the U.K., the exchange said. Selvam relocated from Gemini's Asia-Pacific (APAC) team, and will be responsible for leading the company's licensing and regulatory strategy in Europe and the U.K.
The European Union set a Dec. 30 deadline for its member states to implement MiCA, a set of new rules that govern companies providing crypto services in the region.
"Joining the team at this transformative time is a unique opportunity and shows that Gemini is serious about our commitment to Europe," said Jennings in the press release.
"The regulatory frameworks in the EU and the U.K., including MiCA and the FCA's forthcoming crypto roadmap, signal a new era of sustainable growth for digital assets," he added. |
The Takeaway: Compliance Conundrum |
By Ben Charoenwong and Jonathan Reiter: As Bitcoin continues to rise and institutional investors pour over $20 billion into crypto ETFs, a fundamental shift is occurring in digital asset markets. The appointment of Paul Atkins as SEC Chair, known for favoring market-driven solutions over heavy-handed enforcement, has fueled optimism that crypto can finally balance innovation with regulation. But the crypto industry faces a stark choice that no amount of regulatory flexibility can overcome: either sacrifice the unlimited programmability that makes these systems revolutionary, or accept that they cannot be fully compliant with automated regulations. This isn't a temporary technological limitation – it's as fundamental as the laws of mathematics. To begin to see why, we can think about an economy where shells are money. If we pass a law that nobody can transact more than 10 times per day or hold more than 10% of the shells, we have an enforcement problem. How do we know who holds which shells when? Information asymmetry stymies compliance and compliance devolves to a surveillance challenge. Blockchain technology solves that problem. If everyone sees where all the shells are all the time, then enforcement works. We can build compliance into a system and deny banned transactions. Here, the transparency from the blockchain enables automated compliance. But the long-held premise of Web3 is to automate stock exchanges and myriad complex interactions. Doing so requires moving beyond shells to a system where users create their own assets and upload their own programs. And permissionless access to publish these complex programs causes trouble. The core challenge lies in what computer scientists call "undecidability." In traditional finance, when regulators impose rules like "no transactions with sanctioned entities" or "maintain capital adequacy ratios," banks can implement these requirements through their existing control systems. But, in a truly decentralized system where anyone can deploy sophisticated smart contracts, it becomes mathematically impossible to verify in advance whether a new piece of code might violate these rules. JPMorgan's recent $4 billion blockchain initiative for trading U.S. Treasuries illustrates this reality. The platform processes over $750 billion in daily transactions by requiring participants to meet strict regulatory criteria before joining and limiting their activities to pre-approved trading patterns. Unlike typical cryptocurrency platforms where anyone can write and deploy automated trading programs (known as smart contracts), JPMorgan's system maintains compliance by explicitly restricting what participants can do. This approach has attracted major institutional players like BlackRock and State Street, which collectively have more than $15 trillion in assets under management. Many crypto enthusiasts view such restrictions as betraying the technology's promise. These compromises are not just pragmatic choices – they're necessary for any system that aims to guarantee regulatory compliance. The Securities and Exchange Commission's mandate to protect investors while facilitating capital formation has grown increasingly complex in the digital age. Under Gary Gensler's leadership, the SEC took an enforcement-heavy approach to crypto markets, treating most digital assets as securities requiring strict oversight. While Atkins' anticipated principles-based approach might seem more accommodating, it cannot change the underlying mathematical constraints that make automated compliance impossible in fully programmable systems. The limitations of fully automated systems became painfully clear at MakerDAO, one of the largest decentralized lending platforms with over $10 billion in assets. During March 2024's market turbulence, when Bitcoin's price swung 15% in hours, MakerDAO's automated systems began triggering a cascade of forced liquidations that threatened to collapse the entire platform. Despite years of refinement and over $50 million spent on system development, the protocol required emergency human intervention to prevent a $2 billion loss. Similar incidents at Compound and Aave, which together handle another $15 billion in assets, underscore that this wasn't an isolated case. This wasn't just a technical failure – it demonstrates the impossibility of programming systems to handle every potential scenario while maintaining regulatory compliance. |
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