Author: Neuralnexus

The anticipation of the U.S.-listed ether ETFs’ imminent debut has led to an increase in hedging activity in the options market, as investors seek to protect their existing positions from price swings. The relative richness of ether’s short-term options-induced implied volatility suggests a pick-up in hedging activity.

U.S.-Listed Ether ETFs to Begin Trading Next Week

The impending launch of U.S.-based exchange-traded funds (ETF) tied to ether’s spot price has created a sense of urgency among investors, who are flocking to the options market to hedge or protect their existing market positions from price volatility. Implied volatility (IV), which measures options-derived market expectations for price turbulence over a specific period, has ticked higher across timeframes according to data sources Deribit and Kaiko.

Increased Demand for Options and Derivatives

A call protects against price rallies, while a put offers insurance against price slides. The hedging activity has been more pronounced in short-term contracts, as evidenced by the recent relative richness of implied volatility determined by options contracts expiring on July 19 relative to those expiring on July 26.

IV for Short-Term Contracts

According to Kaiko, the July 19 expiry IV rose from 53% on Saturday to 62% on Monday, topping the July 26 expiry IV. This increase in IV suggests that traders are willing to pay more to hedge existing positions and protect against sharp price moves in the short run.

The increase in IV on the July 19 contract suggests traders are willing to pay more to hedge existing positions and protect against sharp price moves in the short run. This spike in near-term contracts IV indicates a level of uncertainty among traders.

Analysts at Kaiko, Monday’s edition of the newsletter

Ether Volatility Relative to Bitcoin

Traders also expect increased ether volatility relative to bitcoin. According to data source Amberdata, the spread between Deribit’s 30-day ether and bitcoin implied volatility indices (BTC DVOL and ETH DVOL) has consistently averaged around 10% since late May, significantly higher than 5% in the first quarter.

Crypto Exchange Bybit and Analytics Firm BlockScholes Observations

Bybit and analytics firm BlockScholes made a similar observation in a report shared with CoinDesk on Monday. The key findings indicate that investors are increasingly optimistic about ETH, particularly in anticipation of the imminent launch of the first Ether Spot ETFs in the United States.

Key findings indicate that investors are increasingly optimistic about ETH, particularly in anticipation of the imminent launch of the first Ether Spot ETFs in the United States. This optimism is reflected in ETH’s sustained volatility premium over BTC, which has persisted amid heightened market activity.

Report shared with CoinDesk on Monday by Crypto Exchange Bybit and Analytics Firm BlockScholes

Consistency with Uber-Bullish Expectations

The pick-up in hedging activity in ether is consistent with the uber-bullish expectations from the spot ether ETFs, which are expected to begin trading next Tuesday. According to Gemini, spot ether ETFs will likely draw $5 billion in net inflows in the first six months, boosting ether’s market value relative to bitcoin.

Avoiding a Sell-the-Fact Phenomenon

Besides traders, mindful of the ‘sell-the-fact’ phenomenon that followed the debut of bitcoin ETFs on Jan. 11, might be preparing for similar price volatility in ether. However, traders should note that the present market mood and ether’s bullish positioning are significantly more measured than bitcoin in early January.

Traders, however, should note that the present market mood and ether’s bullish positioning are significantly more measured than bitcoin in early January, suggesting low odds of a post-debut sell-the-fact pullback.

BlockScholes report shared with CoinDesk on Monday

As of 2024, the United States accounted for over 40% of the Bitcoin network’s global hashrate. This significant share is largely attributed to two prominent US-based mining pools: Foundry USA and MARA Pool.

Foundry USA: The Largest Mining Pool

According to TheMinerMag, Foundry USA experienced a substantial increase in its hashrate over 2024. At the beginning of the year, the pool controlled approximately 157 exahashes per second (EH/s). However, by December, this figure had risen to roughly 280 EH/s.

Foundry’s impressive growth catapulted it to become the single largest mining pool by hashrate, commanding a significant share of around 36.5% in the Bitcoin network.

MARA Pool: A Close Second

Data from the Hashrate Index reveals that MARA Pool currently controls approximately 32 EH/s or 4.35% of the total hash power in the Bitcoin network.

While Foundry USA dominates the landscape, China-based mining pools still maintain a significant majority of global hashrate.

Market Share of Hash Power by Mining Pool

| Mining Pool | Market Share (%) |
| — | — |
| Foundry USA | 36.5% |
| MARA Pool | 4.35% |
| Other Chinese Pools | 55% |

Hashrate Dominance: A Complex Issue

TheMinerMag reported that the distribution of miners, particularly small-scale participants in mining pools, poses a challenge in accurately estimating true hashrate dominance.

Mining pools often have headquarters in one country but draw computing power from various jurisdictions. This complex landscape makes it difficult to determine which countries or regions contribute the most to global hashrate.

Estimated Breakdown of Hash Power by Country

| Country | Estimated Share (%) |
| — | — |
| United States | 40% |
| China | 55% |
| Other Countries | 5% |

Concerns Over Hasrate Centralization

The concentration of computing power into a small set of mining pools has sparked concerns among industry experts.

In October, Rajiv Khemani, co-founder and CEO of Auradine, expressed his worries regarding Bitcoin decentralization. He emphasized that the lack of national security would be catastrophic if critical mining infrastructure were concentrated in only one jurisdiction.

Khemani urged caution against allowing any single country to control a majority of the Bitcoin network’s hashrate. This, he argued, would undermine the decentralized nature of the currency and expose it to supply chain risks.

A Decentralized Currency Requires Diverse Mining Infrastructure

To maintain the neutrality and security of the decentralized currency, Khemani stressed that critical mining infrastructure should not be manufactured in a single jurisdiction.

In essence, the concentration of hashrate among a few dominant players raises significant concerns about the potential for supply chain disruptions and centralized control over the network.

Sanctions Imposed by South Korea on 16 Individuals and One Group

North Korean hackers have been the focus of governments worldwide, which attribute over half of the value of cryptocurrency stolen in 2024 to these malicious actors. The notorious Lazarus Group is among those prime suspects involved in some of the most high-profile cyber thefts in Web3.

The most recent development comes from South Korea, where the government has imposed sanctions on 15 members of North Korean IT organizations and one related group. These individuals are alleged to have procured funds for North Korea’s nuclear missile development program and the DPRK’s Munitions Industry Department through "overseas foreign currency-earning activities," according to a December 26 news release by South Korea’s Ministry of Foreign Affairs.

The Targets: Kim Cheol-min, Kim Ryu Song, and Others

One of the sanctioned individuals is Kim Cheol-min from the 313th General Bureau. He allegedly earned a "large amount of foreign currency" while working undercover for United States and Canadian companies before delivering the funds to Pyongyang’s nuclear weapons program.

Another individual, Kim Ryu Song, was indicted by US lawmakers on December 11 for violating sanctions, money laundering, and identity theft in generating more than $88 million of revenue over six years. According to South Korean media reports, these individuals are among those who have been sanctioned due to their alleged involvement in the nuclear missile development program.

Total Annual Funds Loss

The total value stolen by North Korean hackers in 2024 was $2.3 billion, a significant increase from the $1.65 billion lost in 2023 (40% more). This highlights the growing concern for the security of cryptocurrencies and the need for governments to take decisive action against these malicious actors.

North Korea Hackers: A Growing Threat to Crypto Security

The increasing success of North Korean hackers has been documented by Chainalysis, a leading provider of blockchain analytics. According to their data, North Korea-affiliated hackers have stolen over $1.34 billion worth of digital assets across 47 incidents in 2024.

This represents more than 61% of the total crypto value stolen during 2024 and nearly one-fifth (20%) of all hacking incidents. The significance of these numbers is underscored by the observation that the DPRK’s involvement in cryptocurrency theft has increased dramatically, marking a 102% increase from the $660 million lost in 2023.

The Numbers Behind North Korea’s Crypto Hacking Activities

• Total value stolen: $1.34 billion
• Number of incidents: 47
• Percentage of total crypto value stolen in 2024: Over 61%
• Percentage of all hacking incidents: Nearly one-fifth (20%)

An Improvement in DPRK’s Hacking Methods

A worrying sign for the future is that despite a decrease in the overall number of attacks, sophisticated attacks by North Korean agents have increased. According to Chainalysis, "notably, attacks between $50 and $100 million, and those above $100 million occurred far more frequently in 2024 than they did in 2023."

This suggests that the DPRK has improved its hacking methods, allowing it to conduct more lucrative exploits. In contrast, DPRK’s exploits in 2022 often resulted in profits of less than $50 million.

Timeline: The Time Between Successful DPRK Attacks

| Year | Average Time Between Successful DPRK Attacks |
| — | — |
| 2024 | <1 year |
| 2023 | Approximately 6 months |
| 2022 | More than a year |

The data from Chainalysis highlights the increasing sophistication and efficiency of North Korean hackers, who are now capable of conducting more lucrative attacks. This trend is concerning for the future of cryptocurrency security and underscores the need for continued vigilance and cooperation among governments worldwide to combat these threats.

Magazine: 13 Christmas Gifts that Bitcoin and Crypto Degens Will Love

Despite the challenges posed by North Korean hackers, there are many in the crypto community who continue to innovate and adapt. The magazine provides a glimpse into the world of cryptocurrency enthusiasts, featuring gifts that cater to their interests.

In conclusion, the pursuit of North Korean hackers continues as governments worldwide work together to combat these threats. With sanctions imposed on key individuals and groups, the pressure is mounting for those involved in nuclear missile development programs to cease their illicit activities.

However, the data from Chainalysis highlights a worrying trend: despite efforts to curb DPRK hacking activity, sophisticated attacks are increasing, suggesting that the North Korean government continues to invest in improving its cyber capabilities.

The future of cryptocurrency security will depend on the cooperation and determination of governments, law enforcement agencies, and the crypto community as a whole.

In a significant development, Terraform Labs co-founder Do Kwon was handed over to United States law enforcement by authorities in Montenegro after a months-long battle over where he would be extradited.

Montenegrin Prime Minister Confirms US Custody

On December 31, Montenegrin Prime Minister Milojko Spajić took to the social media platform X to announce that Kwon was indeed in US custody and would face criminal charges in the case involving the collapse of Terra. The confirmation came just four days after the Montenegrin Justice Minister Bojan Božović approved the extradition, rejecting a petition from South Korea.

Background on Kwon’s Extradition

The extradition process has been ongoing for several months, with both the US and South Korea filing charges against the Terraform Labs co-founder and some Terraform executives. However, Kwon’s whereabouts were unknown until he was arrested in Montenegro in 2023. The prolonged battle over his extradition had left many wondering where he would ultimately be sent.

South Korean Court Issues Arrest Warrant for Impeached President Yoon

In a separate development, the Seoul Western District Court approved an arrest warrant for President Yoon Suk Yeol on December 31, 2024. This marked a significant move against the impeached president, who is accused of attempting to impose martial law in early December.

Yoon’s Impeachment and Subsequent Arrest Warrant

According to reports, Yoon was stripped of power on December 14 when the country’s parliament voted to impeach him. He was replaced by Deputy Prime Minister and Finance Minister Choi Sang-mok as interim president. The impeachment came after Yoon failed to report for questioning for the third time.

A First in South Korean History

This marked a historic moment, as Yoon became the first sitting South Korean president to face an arrest warrant granted by a court. The decision was made after a joint investigative task force requested an arrest warrant for him. The development has sent shockwaves through the country’s political landscape.

Pro-Crypto Lawyer John Deaton Offers to Probe Operation Chokepoint 2.0

In related news, pro-crypto lawyer John Deaton offered to lead a probe into Operation Chokepoint 2.0 on January 4. The initiative, which aimed to cut crypto companies out of the traditional banking system, has raised concerns about regulatory overreach.

Deaton’s Offer and Background on Operation Chokepoint 2.0

Deaton, who is well-known for his efforts to support Ripple’s legal battle with the US Securities and Exchange Commission (SEC), expressed his willingness to lead a probe into Operation Chokepoint 2.0 without salary. He emphasized that the initiative creates a "dangerous precedent" where regulatory bodies can quietly suppress entire industries they disfavor.

Court Order Allows Coinbase to Obtain Unredacted Files

Deaton’s offer followed on the heels of a court order allowing crypto exchange Coinbase to obtain unredacted files from the Federal Deposit Insurance Corporation (FDIC). The unconfirmed operation has raised concerns about regulatory overreach and potential suppression of entire industries.

China Tightens Crypto Trade Oversight with New Forex Rules

In another development, China’s foreign exchange regulator introduced new rules that require banks to monitor and flag risky trades involving crypto assets. The move is aimed at making it harder for residents to purchase digital assets and use them for cross-border gambling, underground banks, and illegal financial activities.

Impact of China’s New Rules

The new rules will also require banks to track the activities based on the identity of the institutions and individuals involved, as well as the sources of their funds and the frequency of their trades. The move is expected to have a significant impact on crypto trade oversight in China.

Conclusion

The extradition of Do Kwon to the US marks a significant development in the ongoing saga surrounding Terraform Labs. Meanwhile, the arrest warrant issued against President Yoon Suk Yeol has sent shockwaves through South Korea’s political landscape. The introduction of new forex rules in China is also expected to have far-reaching implications for crypto trade oversight.

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Bitcoin Sees Record High Following Trump’s Election Victory

On Wednesday, the largest cryptocurrency by market value, Bitcoin (BTC), broke records as it climbed over 9% to hit a new high of $76,481. This significant surge comes in the wake of Donald Trump’s U.S. presidential election victory, who voiced support for the crypto industry during his campaign.

According to data from CoinDesk Indices, this is the fourth-best day of the year for Bitcoin, following its previous highs in February, March, and August. The cryptocurrency has shown remarkable resilience, with its price increasing by over 12% after the Aug. 5 yen carry trade unwind.

Trump’s Victory: A Boost to Crypto Industry?

The news of Trump’s election victory may have come as a surprise to some investors, but earlier research indicated that BTC could rise up to 11% on a Trump victory. This prediction has proven correct, with Bitcoin experiencing one of its most significant gains in recent history.

Record-Breaking Inflows into Spot-Listed ETFs

The rally in Bitcoin’s price was accompanied by massive inflows into spot-listed bitcoin exchange-traded funds (ETFs). These funds added a net $621.9 million, snapping a three-day streak of outflows. The total net inflows have now reached $24.2 billion.

Among notable performers, Grayscale’s Bitcoin Mini Trust (BTC) registered $108.8 million, its second-biggest day since the start of trading. Meanwhile, Bitwise Bitcoin ETF (BITB) saw a $100.9 million inflow, also one of its biggest net inflow days.

BlackRock’s iShares Bitcoin Trust: A Contrasting Performance

In contrast to the above-mentioned funds, BlackRock’s iShares Bitcoin Trust (IBIT) posted a second-straight day of net outflows, losing a total of $113.3 million over the period. However, trading volume in the ETF was at a record level, with Senior Bloomberg ETF analyst Eric Balchunas noting that ‘IBIT just had its biggest volume day ever with $4.1b traded.’

Trading Volume: A Record-Breaking Day for Bitcoin ETFs

The group of bitcoin ETFs saw a trading volume of over $6 billion, their best day since the early days of trading. As Balchunas observed, ‘Most of the ETFs did 2x their average. It was just an all-around banger day for an infant category that never ceases to amaze.’

To provide some historical context, ETF trade volume reached a peak of $9.9 billion during the March bull run, according to data from checkonchain. Total trade volume on Nov. 6 reached approximately $76 billion, comprising futures volume of $62 billion, spot volume of $8 billion, and ETF trade volume of $6 billion.

Bitcoin: Futures vs Spot vs ETF Trade Volume

While the trading volume in bitcoin ETFs has been impressive, it still accounts for a small percentage of the total trade volume. The following chart illustrates the trade volume distribution between futures, spot, and ETF markets.

| Market | Volume |
| — | — |
| Futures | $62 billion |
| Spot | $8 billion |
| ETF | $6 billion |

Ether: A Lagging Performer

In contrast to Bitcoin’s impressive performance, Ether (ETH) has been lagging behind. Net inflows into ether U.S. spot ETFs totaled $52.3 million, the most since Sept. 27, according to Farside data.

As of press time, Bitcoin is trading at just over $75,000, up 77% year-to-date, while Ether is trading at $2,822, up 20% year-to-date.

Conclusion

The record-breaking performance of Bitcoin on Wednesday has sent shockwaves through the crypto market. With its price surpassing $76,481, investors are left wondering if this gain is sustainable. However, earlier research and the significant inflows into spot-listed ETFs suggest that Bitcoin’s future looks bright. As the market continues to evolve, one thing is clear: Bitcoin has broken records once again, cementing its position as a leading player in the crypto industry.

Key Takeaways

• Bitcoin (BTC) surpassed $76,481 on Wednesday, marking a new record high.
• The largest cryptocurrency by market value climbed over 9% following Donald Trump’s U.S. presidential election victory.
• Net inflows into spot-listed bitcoin ETFs totaled $621.9 million, snapping a three-day streak of outflows.
• Grayscale’s Bitcoin Mini Trust (BTC) registered $108.8 million in net inflows, its second-biggest day since the start of trading.
• Bitwise Bitcoin ETF (BITB) saw a $100.9 million inflow, one of its biggest net inflow days.

Further Reading

• What is a Bitcoin ETF?
• How to Buy a Bitcoin ETF