Monthly report of January 2023

This monthly report reviews the most important cryptocurrency news in January. In particular, the report delves into the bankruptcy of Genesis, Aave v3, Bitcoin news, BlackRock's announcement related to Bitcoin, Strike's collaboration with the payment services giant, and El Salvador's bitcoin-related advances.

              
January in the cryptocurrency market
The prices of cryptocurrencies started the year very positively. The rise in cryptocurrency prices was influenced, among other things, by the inversion of macroeconomic indicators to better than the pessimistic expectations at the end of the year. Of the cryptocurrencies offered by Northcrypto, the best performer was Aave, whose price rose by almost 60% during January. The price increase was driven by, among other things, Aave v3 and the GHO stablecoin probably coming out in the next few weeks. Of the other cryptocurrencies offered by Northcrypto, the prices of Polygon and Bitcoin increased by around 45% and nearly 40%, respectively. The prices of Litecoin and Ethereum were up more than 30%, while the price of Chainlink rose below 25%.
 
Bankruptcy of Genesis
Genesis Global Capital (Genesis), a major provider of cryptocurrency lending services, particularly for institutional players, filed for bankruptcy in January. Genesis's bankruptcy filing listed more than 100,000 creditors and debts of 1 to 10 billion euros. In November last year, following the collapse of cryptocurrency exchange FTX, Genesis announced that it would suspend the issuance of new loans as well as withdrawals of client funds. Since then, Genesis's situation has been on the news practically weekly, and with the bankruptcy filing, things moved another step forward.
 
Aave v3 started operating
The v3 version of the decentralized peer-to-peer lending service Aave started operating on top of Ethereum in late January. Aave v3 brought with it several improvements and new features. Among other things, Aave v3 optimized gas payments, and as a result, the use of Aave became about 20-25 percent cheaper. In addition to this, High-Efficiency Mode improved the efficiency of the capital supplied and borrowed, and Isolation Mode allowed the use of more cryptocurrencies as collateral in Aave while maintaining the security of the protocol.
 
News related to Bitcoin
The first cryptocurrency, Bitcoin, turned 14 on January 3. At that time, it had been exactly 14 years since a person or group using the name Satoshi Nakamoto mined the first Bitcoin block, the Genesis block.
 
Bitcoin hashrate rose to new highs of over 322 ExaHash per second (EH/s), according to crypto analytics firm Glassnode, in January. Hashrate refers to the total computing power used by miners to maintain the Bitcoin network. With hashrate at record highs, the Bitcoin network can be considered safer than ever before. Hashrate has also historically correlated positively with the price of Bitcoin.
 
According to data released in January by crypto analytics firm Coin Metrics, around €7.5 trillion worth of transactions were processed on Bitcoin's blockchain in 2022. This translates into approximately €240,000 for every second of the year. Transactions worth €7.5 trillion mean that Bitcoin processes more value than payment solution provider Visa or Mastercard.
 
BlackRock's popular fund can now invest in bitcoin
BlackRock, the world's largest asset manager and a manager of approximately €8 trillion in assets, announced that it will allow bitcoin to be added to its €15 billion Global Allocation fund. The fund in question is one of BlackRock's most popular among regular and passive investors. More specifically, the fund can now invest in Bitcoin futures traded on trading venues registered with the CFTC, which oversees the US derivatives market. A futures contract is a derivative contract between two parties that commits to buying or selling an underlying asset at an agreed price at a given moment in the future.
 
Strike partners with payment services giant
Jack Mallers, CEO of Strike, a payment company specializing in Lightning Network, announced in January on social and microblogging service Twitter that Strike began working with payment services giant Fiserv, the parent company of payment solutions provider Clover. The collaboration makes it possible not only to use Strike on Clover's payment terminals but to use all the solutions that utilize Bitcoin Lightning Network to pay. Initially, Strike's partnership will include a 90-day pilot period, after which Strike's goal is to make it possible to pay using the Lightning Network in the approximately 6 million marketplaces that use Clover's payment solutions.
 
El Salvador passed a law allowing bitcoin bonds
In early January, El Salvador's legislative body passed a law allowing the launch of bitcoin bonds. Initially, El Salvador announced more than a year ago plans to raise $1 billion in funding through bitcoin-backed bonds. Half of the funds raised with bonds are to be used in the future Bitcoin City for building infrastructure and bitcoin mining infrastructure. The other half is going to be used to buy bitcoin. The bonds are planned to be issued in Bitcoin sidechain Liquid Network, with the issuance taking place soon, according to information from El Salvador.
 
Summary
The announcement that Genesis was filing for bankruptcy did little to move the cryptocurrency market. This means, therefore, that because of the news coverage of the problems with Genesis in recent months, the bankruptcy had already been priced in, so to speak, the prices of cryptocurrencies.
 
After the Aave v3 version, the next major thing for Aave is the upcoming overcollateralized and decentrally managed GHO stablecoin, which is expected to emerge in the next few weeks. It will be interesting to see if the January price increase of Aave continues until the GHO release.
 
Bitcoin, which turned 14 in January, has a record-high hashrate making its network safer and better than ever before. Also, the annual transfer of a higher value than the payment company Mastercard and Visa can be seen as an indicator of the functionality and reliability of the network.
 
The decision by BlackRock, which joined cryptocurrencies in the fall of last year, to enable the addition of bitcoin to one of its most popular funds is the next significant step after the asset manager's launch of the Bitcoin fund last year. This can be seen as an indication of the growing interest of the world's largest asset manager and its clients in cryptocurrencies, especially bitcoin.
 
Strike announced first less than a year ago in the spring significant collaborations with traditional payment service companies. The Clover collaboration, announced in January, can be seen as a continuation of payment service companies' interest in the Lightning Network. The attitude of traditional payment service companies towards cryptocurrencies as an opportunity rather than a threat is naturally positive for the future use of cryptocurrencies.
 
El Salvador, the first country to make bitcoin legal tender, is continuing its journey towards a more holistic exploitation of Bitcoin through bitcoin bonds. Bitcoin bonds generated a lot of interest at the time of their initial announcement, made over a year ago, so it will be interesting to see how high interest will be at the time of its imminent issuance.
 
Ville Viitaharju
Cryptocurrency specialist