And what we expect next ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ Q3 REPORT Crypto Danish Ajmeri — Head of Crypto October 11, 2024 Q3 IN NUMBERS (July 1 - Sept. 30) BTC: +6.1% ETH: -22.8% SOL: +9.3% Total crypto market cap: $2.09T (-7.1%) Three big things that happened in crypto Hi there, In my last email, I talked about how summer has historically been pretty slow for crypto, and, well, that proved true yet again. But after a relatively bearish second quarter, the lull was a bit of a relief. The biggest news — the launch of ETH ETFs — ended up being pretty underwhelming, especially compared to the fervour we saw when BTC ETFs came out earlier this year. Other than that, assets mostly traded sideways. Many experts attributed that to two major factors: investors continuing to wait out the results of the U.S. election (Republicans tend to lean more pro-crypto, while Democrats have historically been more hawkish), and high interest rates keeping a ceiling on the market. Here are three important things to know: Canada extended its stablecoin regulation deadline (again) About a year ago, the Canadian Securities Administrators (CSA) decreed that platforms offering stablecoins had to comply with a new set of rules meant to prevent another LUNA-style meltdown. (If you aren’t familiar with the LUNA story, you can read about it here.) Essentially, issuers were told to disclose nonpublic details about their governance and operations, including opening up their books and confirming they have the reserves they say they do. Platforms pushed back, and instead of digging in their heels and effectively banning all stablecoins (including the one of the biggest, USDC) from Canada, the CSA began working with them to find other ways to meet the requirements. After pushing the original April 30 deadline back to October 31, late last month, the CSA delayed the deadline once more, until the end of the year. Crypto polished its crystal ball The decentralized prediction-market platform Polymarket allows users to speculate on the outcome of anything, from interest rate decisions to governments admitting to the existence of aliens. Although the platform has been around since 2020, its popularity really took off this past quarter, due mostly to wagers on the U.S. presidential election. (There was $1.64B on the line as of yesterday.) Proponents call Polymarket a forecasting tool and claim it is more accurate than voting polls, as it updates in real time and forces people to put their money where their mouths are. ETH looked more like EESH The third quarter came with a perfect storm of issues for Ethereum network: The price of ETH dropped by nearly a quarter. ETFs launched, resulting in a net outflow of $600M (compared to an inflow of nearly $18B for BTC when it got ETF approval earlier this year). Nobody could agree on the best path forward (is it continuing to enhance scalability through Layer 2 technologies, which hasn’t done much for prices, or going back to basics and improving the blockchain itself?). The network’s very own founder and paladin, Vitalik Buterin, kicked off an intense debate by criticizing what he saw as ETH’s shift in focus from utility to yield farming. What’s next? Traditionally, fall has been an active period for crypto, maybe because all those investors are headed back to their computers to make money after spending a bunch over the summer. We’ve also already seen some signs that could be positive for the market: the U.S. lowered interest rates last month (among other effects, lower rates often pull people away from savings accounts in search of higher returns), and China announced a huge stimulus package, boosting the Chinese markets and giving crypto some momentum. The biggest factor still on the table is the upcoming U.S. election. We’ll have to wait and see what effects come from that. All the best, Danish Ajmeri Head of Crypto CRYPTO 201 Wrapped bitcoin Bitcoin’s primary purpose is to serve as a form of currency that’s outside the control of any one person, group, or entity. It doesn’t do much else. You can’t, for example, put it on the Aave network to make a loan and earn interest, or set up a smart contract with its terms ensured by the blockchain. To perform those functions, BTC has to be brought onto the Ethereum blockchain — a concept known as “wrapping.” This allows you to keep your BTC exposure (maybe you think it’ll gain more value than ETH) while also being able to use all of Ethereum’s DeFi applications. Wrapping BTC is just like exchanging one token for another: find an exchange you trust, deposit your BTC, and get wBTC in return. You’ll pay transaction fees, but that’s it. Now you have a form of BTC that can be used in a lot more places. And if BTC goes up in value, your wBTC goes up with it. While bitcoin is the most popular wrapped cryptocurrency (due to the fact that it’s the most popular token in the world), it isn’t the only one. You can get wrapped NXM, wrapped dogecoin, and even wrapped ETH. 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