Gryphsis Cryptocurrency Weekly: Bitcoin ETF Approved by SEC

Author: Gryphsis Academy

Market and Industry Snapshot

Layer 2 Overview:

Last week, Layer 2 saw an upward trend except for zkSync Era, which dropped by 13.44%, with Starknet showing the most significant increase of 13.9%. Protocols like VaultCraft, Swapline, UniDex, SyncSwap, and Starksport demonstrated notable TVL growth rates.

LSD Sector Overview:

In the LSD sector, the amount deposited in Ethereum changed little, but the total amount withdrawn increased by 7.92%. In terms of market share, all blue-chip LSDs saw an increase of over 10%, with sfrxETH showing the most significant rise of 20.42% this week.

RWA Sector Overview:

Last week, the market capitalization of real-world assets rose by 4.69%, but the 24-hour trading volume dropped significantly by 61.48%. RWA tokenized treasury rose by 1.54%, while the value of tokenized U.S. Treasury bonds slightly decreased by 0.03%. Notable growth tokens include $LUMI, $MZERO, and $PENDLE. Tokens like $DETF, $BRTR, and $WECO experienced significant losses.

Main Topics

Macroeconomic Overview:

• US Stock V.S. Crypto

Major Events This Week:

• The Bitcoin ETF is approved by the SEC

Weekly Protocol Recommendation:

• AIT Protocol

Weekly VC Investment Focus:

• Finoa($15M)
• Entangle Protocol($4M)
• AI Arena($6M)

Twitter Alpha:

• @MoonKing___ on Realio Network
• @poopmandefi on Berachain
• @Deebs_DeFi on THORchain
• @wacy_time1 on Ethereum Beta
• @ViktorDefi on Desci

Macroeconomic Overview

This week, the stock market showed weaker changes compared to the crypto industry, with SPX and NASDAQ increasing by 0.29% and 0.04%, respectively. In the coming week, focus on major events such as core retail sales, the Philadelphia Fed manufacturing index, and existing home sales.

Major Events This Week

Bitcoin ETF Approved by SEC

The SEC announced on Wednesday that the key documents for listing have taken effect and trading will begin on Thursday. Following the decision, the price of Bitcoin surged past $47,500, with other cryptocurrencies also rebounding.

More than a dozen companies, including BlackRock, Fidelity, and Grayscale, announced plans to cut fees charged to investors in a fierce competition for investor funds.

The SEC's approval of the Bitcoin ETF comes after years of delays and rejections. In August of this year, the D.C. Circuit Court of Appeals ruled that the SEC's rejection of Grayscale's attempt to convert its approximately $26 billion Grayscale Bitcoin Trust (GBTC) into a spot ETF was "arbitrary and capricious." In a statement, SEC Chairman Gary Gensler noted that a court loss in 2023 was one of the driving forces behind the approval of over a dozen applications this week.

For a long time, supporters of a spot Bitcoin ETF have argued that a regulated trading product for the world's oldest cryptocurrency would expose Bitcoin to retail and institutional investors without requiring them to set up wallets or directly invest in digital assets. For example, ETF shares would be available to any U.S. investor with a brokerage account. However, SEC Commissioner Caroline Crenshaw expressed her opposition to the approval, stating that "substantial evidence indicates" that the Bitcoin spot market is unsafe and susceptible to fraud or manipulation. She stated that spot and futures products are not the same and disagreed with the 2023 court ruling.

With optimism surrounding the spot ETF rising, Bitcoin's price has increased from around $27,000 on October 1 to $45,000 at the beginning of 2024.

https://www.coindesk.com/business/2024/01/10/bitcoin-etfs-win-sec-approval-bringing-easier-access-to-biggest-cryptocurrency/

Weekly Protocol Recommendation

Welcome to our weekly protocol segment—here, we focus on protocols making waves in the crypto space. This week, we selected AIT Protocol, an AI data infrastructure providing Web3 AI solutions.

AIT Protocol is a Web3 data infrastructure built on blockchain, primarily used for data annotation and AI model training. It allows crypto users to earn rewards while participating in "Train-To-Earn" tasks and contributing to the development and training of AI models. On December 23, 2023, it raised funds from MorningStar Ventures, Megala Ventures, and a group of angel investors, with specific amounts not disclosed.

It addresses the inefficiencies and high costs of traditional data annotation through several methods:

• Human-In-The-Loop (HITL): Human-machine collaboration reduces reliance on human labor and improves the overall efficiency of the annotation process by combining human intuition with AI efficiency.
• Web3 Global Workforce: Breaks down geographical and accessibility barriers, allowing anyone with an internet connection to easily participate in data annotation tasks, providing affordable, 24/7 global labor.
• Streamlined Onboarding & Cross-Border Payments: Seamless cross-border payments ensure that transactions and payments can be conducted securely and quickly, providing a seamless experience for the global workforce.
• Permissionless Marketplace: Empowers companies, projects, and individuals to create their own data annotation tasks, offering dynamic market opportunities for users to contribute annotated datasets.

By leveraging HITL, a Web3 global workforce, streamlined onboarding processes, and a permissionless marketplace, it addresses the inefficiencies and high costs that plague traditional methods, paving the way for future intelligent data processing. Clients provide data to AIT, which is annotated through community member participation, combined with scientific machines for more refined optimization of the data. It also creates customized AI services tailored to specific company needs to provide business solutions exclusive to enterprises.

The native token of AIT Protocol, $AIT, has a maximum issuance limit of 1 billion and is primarily used for market subscription fees, data processing, AI leasing, and Launchpad.

The AIT product page mainly includes the following sections: Dashboard, Task (only users holding AIT iPass NFT are eligible to complete tasks), Staking (for staking $AIT to earn additional token incentives), Quest NFTs (earn NFTs by completing fixed tasks, and other ecosystem collaborations allow holders to enjoy discounts and other services), NFTs, Bridge (NFT cross-chain supported by LayerZero), IDO.

Notably, AIT will gradually open NFT Staking, launch data annotation on the mainnet, and implement a points system; collaborate with AI DePIN project EMC Protocol, including AI integration and building custom AI using EMC's computing power, among other collaborations.

Overall, AIT Protocol has secured funding, and its Web3+AI track is currently receiving significant attention, while the [Train To Earn] token incentives allow cryptocurrency users to earn rewards for completing tasks, actively contributing to the development and advancement of AI models.

Our Insights

The data annotation service industry that AIT Protocol focuses on had a market value of $1.029 billion in 2023, according to a GrandView Research report, and is estimated to reach $5.331 billion by 2030. With the advent of AI era initiated by ChatGPT, the market development and valuation of intelligent data processing in the AI field are becoming increasingly optimistic. For traditional data annotators, AIT Protocol represents their entry into the Web3+AI era.

Regarding the main two sources of $AIT acquisition:

1. [Train To Earn]: Only NFT holders can complete tasks. We can see in NFTgo that currently 1,451 users hold NFTs, with a floor price of 0.015 ETH, and the trading volume in the last 24 hours has increased by 149%, but the floor price has decreased by 36.6%.

2. Staking: Stake $AIT to earn additional token incentives.

In this regard, if more community users want to earn incentives by completing tasks, the NFT threshold is relatively high, and the current number of holders is only a little over a thousand, which is quite limited; while tokens can be purchased on DEX for staking, it still imposes limits on user participation costs.

Notably, in its Roadmap, AIT will focus on the following areas in 2024:

• AIT Moderation Bot: Launching a bot on Telegram, which will undoubtedly bring the protocol to more Web3 users, expanding user outreach and introducing more global communities.
• Data Validation & Data Marketplace: Optimizing data validation to improve service quality; expanding the market to attract more clients and users.
• Web3 AI Solution: Providing customized AI solutions for companies, effectively training AI models through previously accumulated data annotation business, thereby continuously expanding business.

It is evident that both the promising development prospects of the data annotation industry itself and AIT Protocol's clear expansion blueprint suggest that AIT will have more community participation and higher-quality services to meet more enterprise needs in the future.

Weekly VC Investment Focus

Welcome to our weekly investment focus, where we reveal the most significant venture capital dynamics in the crypto space. Each week, we will highlight the protocols that have received the most funding.

Finoa

Finoa is a cryptocurrency custody and staking service provider based in Germany, focusing on serving institutional clients. Finoa stated that this round of strategic financing was co-led by Maven 11 Capital and Balderton Capital. Finoa supports staking for over a dozen blockchains and is the third-largest validator of the modular blockchain Celestia. Meanwhile, Finoa's flagship custody business accounts for nearly 30% of its revenue, with the remainder coming from brokerage and other services.

https://x.com/Finoa_io/status/1744738610228908115?s=20

Entangle Protocol

Entangle Protocol is a universal liquidity layer supporting cross-chain synthetic derivatives. Entangle provides liquidity and yield access through synthetic products while allowing users to borrow against local enUSD stablecoin collateral.

https://x.com/Entanglefi/status/1744751372455784817?s=20

AI Arena

AI Arena is a PVP fighting game developed by ArenaX Labs, where players can continuously evolve their game characters through AI learning. The combat mode is similar to Nintendo's Smash Bros. game. It combines gaming, NFTs (IP), and AI algorithms to provide players with a new gaming experience while protecting the intellectual property of AI practitioners and helping them monetize. The long-term vision is to create a bilateral market that matches the needs of AI buyers and sellers.

https://x.com/hiFramework/status/1744838173790806341?s=20

Protocol Events

Robinhood lists all 11 spot bitcoin ETFs on trading app

Solana -based MEV bot earns $1.8 million after back-running memecoin trader in seconds

Injective rolls out Volan upgrade focused on real-world assets and connectivity with Cosmos chains

Berachain unveils Artio public testnet ahead of anticipated mainnet in Q2

Circle confidential files for IPO

Industry Updates

Grayscale files for bitcoin covered call ETF following conversion of GBTC

Hong Kong lawmaker calls for swift action following US spot bitcoin ETF greenlight

Coinbase executives offer to help the SEC with its security practices

Upbit Singapore wins full digital asset license from MAS

CFTC advisory committee advances recommendations urging a timely focus on DeFi

Twitter Alpha

There is a wealth of Alpha in crypto Twitter, but navigating through thousands of Twitter threads can be challenging. Each week, we spend several hours researching to curate insightful threads and present you with a weekly selection. Let's dive in!

https://x.com/MoonKing___/status/1745402435248529469?s=20

https://x.com/poopmandefi/status/1650109741060997121?s=20

https://x.com/Deebs_DeFi/status/1745465702973362580?s=20

https://x.com/wacy_time1/status/1745506838714417225?s=20

https://x.com/ViktorDefi/status/1745422303976894523?s=20

Upcoming Events

News Sources

++https://www.theblock.co/post/272177/robinhood-lists-all-11-spot-bitcoin-etfs++

++https://www.theblock.co/post/272109/grayscale-files-for-bitcoin-covered-call-etf-following-conversion-of-gbtc++

++https://www.theblock.co/post/272079/solana-based-mev-bot-earns-1-8-million-after-back-running-memecoin-trader-in-seconds++

++https://www.theblock.co/post/271883/berachain-public-testnet-mainnet-q2++

++https://www.theblock.co/post/271907/usdc-stablecoin-circle-ipo++

That concludes this week's content. Thank you for reading this week's report. We hope you benefit from our insights and observations.

You can follow us on Twitter and Medium for real-time updates. See you next time!

This weekly report is for informational purposes only. It should not be considered investment advice. You should conduct your own research and consult independent financial, tax, or legal advisors before making any investment decisions. Past performance of any asset does not guarantee future results.