Bitcoin ETF surge and DeFi growth: Crypto’s 2024 landscape unveiled

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As 2023 fades into the background, the new year has started with significant developments in the cryptocurrency world.

On Jan. 10, the United States Securities and Exchange Commission approved 11 spot Bitcoin exchange-traded funds (ETFs), a significant milestone in crypto history. After just one week of trading, these ETFs outperformed silver exchange-traded products, making Bitcoin (BTC) the second-largest exchange-traded commodity by volume.

The launch of spot Bitcoin ETFs has sparked speculation about the potential for spot ETFs for other cryptocurrencies. Coupled with the Bitcoin halving, anticipated for April, there’s a strong sentiment of confidence across various sectors about potential price increases, fostering a sense of optimism regarding future value growth.

The February edition of Cointelegraph Research’s “Investor Insights” report of monthly trends delves into the industry’s response to the introduction of spot Bitcoin ETFs in the U.S., covering a wide range of sectors, including crypto-mining businesses, derivatives markets, the decentralized finance (DeFi) sector, and real-world asset tokenization, among others.

The report provides a thorough overview of each segment, incorporating in-depth analysis, future projections and sentiment analysis, offering readers a comprehensive summary of the current landscape and expectations.

Download a PDF of the report for free from the Cointelegraph Research Terminal

DeFi market sees strong growth in January, offset by exploit

January saw the decentralized finance (DeFi) sector truly reflect the broader cryptocurrency market: volatility, excitement and unpredictability. A surprise security breach impacting the Socket protocol resulted in the theft of $3.3 million in Ether (ETH). The Socket protocol team swiftly identified and rectified the vulnerability shortly after the incident. Thanks to collaborative efforts from various analytics firms, about 70% of the stolen funds were reclaimed within a week, offering considerable reassurance to the impacted stakeholders.

While the total value locked (TVL) in DeFi projects and the price of their tokens saw an increase at the beginning of the month, there was a noticeable slowdown in the latter half. However, Sui and PulseChain demonstrated remarkable TVL growth, surging 107% and 189%, respectively. The notable increase in PulseChain’s value can be attributed to the expansion of its native decentralized exchange, PulseX, particularly underscored by the transfer of more than 20 million Dai (DAI) stablecoins from Ethereum to PulseChain in less than a week.

Meanwhile, the growth in Sui’s TVL is linked to the rising popularity of two lending protocols, Navi Protocol, which grew by 162%, and Scallop, which saw a 229% increase. The launch of Scallop’s second phase of its airdrop and rewards program on Jan. 16 contributed to a doubling in the protocol’s TVL.

PulseChain TVL and Sui TVL performance. Source DeFiLlama

Regulatory challenges leave derivatives trading exposed as bulls deleverage

Throughout 2023, considerable differences in regulations across countries and regions, coupled with stringent regulatory measures, markedly restricted retail derivatives trading globally. Centralized exchanges and DeFi projects alike found themselves compelled to cease operations entirely, as acquiring trading licenses for various products became increasingly challenging.

Major industry players, including Crypto.com and Binance, were forced to curtail their operations, scale down their service offerings, reduce leverage ratios, limit the types of products available and restrict access for certain users. Despite these challenges, the derivatives markets continue to serve as a crucial indicator of sentiment within the industry.

Bitcoin and Ethereum open interest-weighted funding rates, January 2024. Source CoinGlass

The Cointelegraph Research team

Cointelegraph’s Research division is staffed by some of the premier minds in the blockchain sector, blending academic thoroughness with the insights gained from practical experience. The team is dedicated to delivering content that is not only accurate but also rich in insight, representing the highest standard of information available in the industry.

With decades of combined experience in traditional finance, business, engineering, technology and research, the Cointelegraph Research team is perfectly positioned to put its combined talents to proper use with this latest Investor Insights report.