Regulatory Crackdown, Macro Backdrop Kill Momentum

After two weeks of bullish crypto momentum, Bitcoin’s (BTC-USD) winning streak ended abruptly this week. The legacy token was on the verge of beating its 10-year-old record of maintaining 15 consecutive days of green candles. However, the streak ended on January 18 after BTC dropped below support at $21,500. 

At writing, BTC was consolidating just below the $21,000 mark. BTC’s pullback from earlier weekly highs can be attributed in part to the U.S. Department of Justice’s (DOJ) decision to unveil an “international cryptocurrency enforcement action” on January 18. 

Another potential reason behind retreating Bitcoin prices was the U.S. Producer Price Index (PPI) figure released this week. Contrary to expectations, December 2022’s producer price index (PPI) stood at 6.2% year-over-year (YoY) compared to the previous figure of 7.3%, signaling easing inflation. With investors speculating that the U.S. Federal Reserve may slow its pace of interest rate hikes, BTC and other major cryptocurrencies experienced a sharp sell-off that shrunk weekly returns after the data was published.

Solana Leads Altcoins to the Upside

Most altcoins were able to sustain the previous week’s upward momentum, with Solana (SOL) establishing itself as one of the leading outperformers on the upside. Following months of declines in the aftermath of the FTX meltdown, SOL registered an impressive 31% gain over the last week, primarily due to increased developer activity, user adoption, and a series of promising announcements.

While several other altcoins also recorded double-digit returns, this week’s standout performance came from Decentraland (MANA), Frax Finance (FRX), and Aptos (APT). The value of Decentraland (MANA) jumped by nearly 67.37% this week after the metaverse platform revealed its partnership with the Australian Open (AO) tennis tournament. 

Meanwhile, Ethereum (ETH-USD) -based project Frax Finance (FRX) propelled its way into the top 100 cryptos by capitalization this week after surging 65% over the last seven sessions. This positive price action in the value of FRX and other liquid staking cryptocurrencies can be connected to Ethereum’s upcoming “Shanghai” upgrade, after which users can withdraw their Ethereum currently staked to validate network activity.

Aptos’ APT token was another strong performer after jumping by roughly 54% this week. The value of the Layer-1 blockchain’s native APT token surged following news that Web3 infrastructure provider Moralis will be integrating with Aptos. The fresh integration will add support for all existing API endpoints, build a dedicated Aptos API, and incorporate real-time data streaming via webhooks from Aptos to Moralis.

Monero and ApeCoin Face Relentless Resistance

Despite the broadly positive performance recorded across the crypto landscape over the last seven sessions, Monero (XMR) and ApeCoin (APE) significantly underperformed their peers after both tokens lost nearly 5% of their value. Monero’s falling hashrate is among the key reasons behind this week’s drop in value. The value of XMR briefly rallied last week but began consolidating soon after and is currently trading 70% below its previous all-time high.

ApeCoin (APE), on the other hand, continues to battle price corrections due to a consistent drop in the number of daily active users on the network. The asset’s trading volume has steadily dipped in recent weeks amid weak investor sentiment due to the unexpected decline in its open interest (OI) rate.

Australia’s New Stablecoin, a $500 Million Web3 Fund, and More

Amid the growing interest in digitizing national currencies and central bank experimentation, the National Bank of Australia (NAB) is the latest central bank to unveil blockchain initiatives with a plan to launch an AUD-pegged stablecoin atop the Ethereum blockchain by mid-2023. The AUDN stablecoin aims to streamline cross-border transactions and carbon credit trading, helping users overcome hassles associated with the SWIFT payment network.

Switching gears to funding and investment trends, venture capital firm Hashkey Capital has closed a $500 million investment round. These funds will be allocated across infrastructure, tools, and applications designed to accelerate the mass adoption of blockchain, Web3, and other emerging technologies. At the same time, SkyBridge Capital’s Anthony Scaramucci has invested in a new crypto company founded by FTX US’s ex-President Brett Harrison.

Last but not least, the United States Department of Justice (DOJ) has implemented an “international crypto enforcement action” in coordination with France against Hong Kong-based P2P crypto platform Bitzlato and its founder Anatoly Legkodymov for involvement in unlicensed money transmissions worth more than $700 million. The news sparked an immediate sell-off across the crypto ecosystem before a modest rebound from lows took hold.

Disclosure