ETF Hype: $2.25B Crypto Flows in 2023

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Good Morning. The market is whipsawing as market participants await the imminent Bitcoin ETF. Whether we see an approval (most likely) or rejection, price action will be extremely volatile for the next few weeks. Have fun.

In Today's Email:

• What Matters: $2.25B 2023 crypto flows 🧪

• Founders Highlight: Martin of Mountain Protocol 🏔️ 

• Deal Flows: CMC to Incubate GMRX 🧪

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WHAT MATTERS

2023 Sees $2.25B Crypto Inflows Thanks to ETF

State of play: Jacquelyn Melinek, a senior reporter from TechCrunch, reported that sources close to the matter claim the SEC will approve bitcoin spot ETFs for multiple firms’ applications.

In 2023, digital asset ETPs saw $2.25B in investments, doubling 2022's inflows, mainly in Q4 due to expected SEC approval of US bitcoin spot-based ETFs, according to CoinShares.

• The final week of 2023 alone saw $243M of net inflows.

• Bitcoin dominated the numbers with $1.9B of inflows in 2023, 87% of the $2.2B total. CoinShares noted that this ratio was the highest ever, surpassing the previous record of 80% in 2020.

• In 2023, Solana-related investment products attracted $167M in net inflows, while Ethereum lagged with $78M.

Why it matters: Crypto markets are first and foremost about flows.

• The trend outlined above highlights that we’re potentially (most likely, most probably, pls sir for mi familia) at the beginning of the next bull market.

For builders and investors: 2024 will be the right year to launch your products and tokens as attention and capital will be returning to the crypto market, on top of the Fed’s pivot to reduce interest rates.

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BUILDER-INVESTOR HIGHLIGHT

Martin Carrica of Mountain Protocol

Martin Carrica is the co-founder of Mountain Protocol, the issuer of USDM, a regulated & permissionless yield-bearing stablecoin.

Previous backgrounds: Martin began his professional journey as a consultant at McKinsey in 2013, returning for a stint from 2018 to 2019. He also worked as a product manager for two companies between 2015 and 2017.

• In 2020 he founded Nalu, a startup that helps banks and fintechs launch new products.

• Martin founded Mountain Protocol in 2022.

• Martin holds a Master of Engineering from Instituto Tecnológico de Buenos Aires and pursued an MBA from MIT Sloan School of Management from 2016 to 2018.

The big idea: USDM aims to provide access to US dollars while also providing access to US Treasury yields to anyone outside of the US — essentially taking the margins that incumbents like USDT and USDC have been enjoying.

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INSIGHTS

Saga Airdrop Eligibility and Tiering System

Saga, a Web3 scalability protocol, announced its community genesis airdrop and unveiled the eligibility criteria. Here are the key takeaways from the announcement.

• Over 100K wallets are eligible from the ATOM community: wallets that increased their stake from 04/20/23 to 10/20/23 and staked over 25 $ATOM before 10/20/2023 are eligible.

• Over 27K wallets are eligible from the Celestia community: wallets that staked more than 23 TIA on 12/01/23 are eligible.

• Over 26K wallets are eligible from the Polygon community: wallets that staked more than 300 MATIC on 10/20/23 or wallets that bridged more than 0.4 ETH using the ZKEVM bridge are eligible.

Tiering System

Eligible participants in each community will be categorized into small, medium, and large airdrops, with each tier getting 5x the airdrop of the previous one.

• Additionally, there's a 4x bonus multiplier for those showing strong loyalty within these communities.

DEAL FLOWS

CoinMarketCap to Incubate GMRX Token

Deal flows slowed as we begin 2024, not many announcements this week.

The utility token of GAIMIN (GMRX), a leader in decentralized data processing, is selected as the first to be incubated by CoinMarketCap's new CMC Labs accelerator program.

• CMC Labs' incubator program aims to collaborate with organizations that show a strategic ability to innovate in the crypto industry by leveraging CMC's expertise and brand.

• GMRX supports the GAIMIN ecosystem, offering utility to gamers through its launcher, gaming platform, and monetization engine.

• CoinMarketCap has 64M daily active users while Gaimin achieved 12B+ impressions in 2023.

Deal flows in the past week:

• ISSP, Undisclosed $ Strategic Round.

QUICK BITES

• Visa announces web3 loyalty rewards.

• Brock Pierce defaults and sues his partner.

• Binance US hires a new chief compliance officer

• USDC momentarily depegs to $0.74 on Binance.

• ACE Exchange Founder arrested for alleged fraud.

• dYdX publishes post-mortem on $9M November attack.

• Huobi Korea shuts down platform citing business difficulties

• Goldman Sachs eyeing a bitcoin ETF role via BlackRock and Grayscale.

• Celsius to unstake ETH holdings for creditors to ensure ample liquidity.

• SEC aims to leverage partial Terraform court victory in cases against Binance and Coinbase.

NOTEWORTHY READS

• Cicada Partners’ read on crypto lending market outlook in 2024.

• Rebecca Retig’s read on crypto optimism in the age of the doomer.

• Ben Wee’s read on yields 101: exploring sources of organic yield in DeFi.

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Disclaimer: All the information presented in this publication and its affiliates is strictly for educational purposes only. It should not be construed or taken as financial, legal, investment, or any other form of advice.