Avalanche and Solana belong to the group of Ethereum killers because they support smart contracts and provide high speed and low costs. It takes Ethereum a few minutes to complete a transaction, while Avalanche does it in less than a second.



The same applies to fees: it's $0.04 for Avalanche and an average of $11 for Ethereum.



Ethereum wins over other altcoins due to its long history, lack of critical failures (which Solana is famous for), and high reliability expressed in the number of active validators, which is currently 888,000 for Ethereum and just 1,600 for Avalanche.

But the 'killer' is doing quite well since its staking reward rate is 7.7%, while Ethereum's is only 3.8%.



AVAX's price has skyrocketed 3.5 times to $35, and Ethereum has only seen an 81% increase.



This significantly fuelled interest in Avalanche, where the number of validators came close to an all-time high, and the number of daily transactions set new records. On 23 November, the network processed over 7 million transactions.



This year's success was predictable. At the end of May, we covered (https://stormgain.com/blog/avalanche-prepares-the-ground-for-growth) the emergence of major partners for the network and Circle's deployment of the EUROC stablecoin based on it. In November, a pilot project with Citibank was revealed that uses blockchain infrastructure for interbank exchange, while JPMorgan announced a joint project to tokenise financial assets and automate portfolio management.

Implementing these projects will create a strong base for Avalanche's continued growth and make the network more attractive for future integrations.


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Autumn marked the transition from a bear to a bull market. After 533 days, Bitcoin crossed the threshold of the actual mid-market price (the updated realised price model from analyst agency Glassnode).



Over 95% of short-term holders (STH), mostly traders and retail investors, turned out to be in the black.



This group typically experiences abrupt mood swings. As seen in the chart above, when "critical mass" is reached (i.e., the index surpasses the 90% threshold), a market correction often follows. This is STH striving to lock profit or negatively react to the correction.

Derivative traders have lost over $300 million in bullish positions in the past 24 hours. This was primarily due to a sharp price decline that triggered Stop Loss orders and received an additional boost for an even greater correction.



Initially, the sale could've been triggered by a whale or a major market maker. We have repeatedly warned about this risk since the market depth and trading volumes are far from even this year's highs, and traders have significantly increased leveraged buying. Combined, these factors create a favourable environment for market manipulation.



Bitcoin's price has surged 2.5-fold to $42,000 in 2023, leading many market participants to think that a technical correction is possible.



Additionally, negative sentiment has been fuelled in recent days by talk of the SEC possibly refusing to approve spot ETFs. John Reed Stark, a former SEC official, hints:

"…For Gensler to approve spot ETFs would be a capitulation, contrary to his conduct and enforcement practices".

Fuel was added to the fire after the investment giant BlackRock made an adjustment to its spot ETF application. In it, the firm describes the negative impact on the value of Bitcoin if the SEC deems the ETF to be a security. This wording didn't exist in previous versions. It seems that it appeared after BlackRock met with the SEC.


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The desire to catch the reversal from the round level contrary to the main trends sometimes leads traders to significant losses. Over the last day, sellers on the perpetual futures market who were counting on the reversal from $40,000 lost $84 million. Previously, they incurred significant losses when the price surpassed $35,000.



Among institutional investors, there are also desperate players investing in short crypto funds who derive profit when the asset's value decreases. While $0.9 million was withdrawn from such funds two weeks before, the inflow totalled $3.6 million last week.

The share of bears in this group of investors was only 2.7% of the total inflow to Bitcoin funds.



Excluding a possible bounce from the round level and an imbalance in favour of the bulls in margin trading, the only valid arguments for the current sell-off could be the expectation of the SEC's denial to launch ETFs or a sudden rate hike by the Fed.

The probability of the second event is minimal as inflation is gradually declining, and an excessively high interest rate may result in a recession. As for the SEC, the regulator may once again move the deadline for approving spot ETFs. However, a complete rejection of the new product launch is nearly off the table due to the SEC's loss on Grayscale's appeal, where the judges deemed the SEC's approach to be "arbitrary and capricious". The case was about transforming the trust fund into a spot Bitcoin ETF, and appeal deadlines have expired. The "automatic" switch will happen in March.

Growing expectations of an upcoming switch have caused the fund's share discount to the underlying asset to drop from 46.1% to 8.7% this year.



Another example of increased interest from institutional investors (who have been the leading investment force for Bitcoin since 2020) is the setting of a new high in inflows into the largest BITO futures ETF and the tripling of shares of leading cryptocurrency companies (e.g., MicroStrategy or Marathon Digital) this year. Due to the lack of an easy-to-operate spot ETF, institutional investors are investing in related products.



In 2023, Bitcoin is going strong with the expectation of positive developments. Investment volumes are rising, more people are sending coins to cold wallets, and cryptocurrency exchanges' reserves are continuing to melt away. In these conditions, playing short looks quite risky.




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Bitcoin is overtaking traditional financial instruments by a significant margin. BTC's price has seen a 150% increase in less than 12 months, while the Bloomberg World Stock Market Index has risen 15%, and gold gained 14% over the same time.



Bitcoin's price is rising due to two anticipated events. First is approval to launch spot Bitcoin ETFs in the US. There are currently 12 applications, and the number continues to grow. The applicants include the world's largest financial services companies, BlackRock and Fidelity, which have over $10 trillion in assets under management.



An ETF will raise capital from institutional investors who can't interact with cryptocurrency directly. This would include pension funds and insurance companies, first and foremost. Institutional investors are likely to allocate part of their funds to cryptocurrencies to diversify their portfolios, and 1% of BlackRock's assets already accounts for 12.5% of Bitcoin's total capitalisation.

The boost from the emergence of ETFs in the US is hard to exaggerate. For example, the US accounts for 42.5% of the $109 trillion global stock market.



Bitcoin's halving event and the reduction of the supply rate is the second anticipated event. The deflationary mechanism contrasts with excessive money printing by governments to cover rising costs. Each time halving has occurred, it's led to Bitcoin experiencing a rally.



The third factor of growth is the strengthening of the belief that the US Federal Reserve has reached the end of its interest rate hike cycle. The reason was the latest speech by Federal Reserve Chairman Jerome Powell, in which he discussed the success of the regulator's monetary policy and the gradual decline in inflation. Powell's favourite indicator, core inflation, has fallen to 2.5% over the past six months. This is close to the Fed's 2% target rate. Nevertheless, the Fed Chairman gave a clear signal that this isn't a reason for a rate reversal just yet, saying:

"It would be premature to conclude with confidence that we have achieved a sufficiently restrictive stance or to speculate on when policy might ease. We are prepared to tighten policy further if it becomes appropriate to do so".

The market reacted to his words in its own way, and a number of media outlets interpreted Powell's speech as a signal that the key interest rate would decline rapidly. Gold and stock indices shot upwards, and Bitcoin gained 10% in this month alone to reach $41,500 per coin.



This assumption among market participants isn't groundless. According to the minutes of the regulator's meetings, the majority of FOMC members expect the first rate cut to happen as early as next year. The Fed's reversal will further increase investors' interest in risky assets.


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Contrary to developers' expectations, the number of validators in November didn't reach 1 million. Instead, it started to decline. From May to September, the number of departing validators averaged 380 validators per day, but that number was compensated for by an influx of new ones. Since October, however, 1,018 validators per day have been leaving.



Currently, the network has 880,000 active validators, and the waiting time in the connection queue has decreased from 21 days in September to less than one day.



In November, a decrease in staking pool volume was seen for the first time since the Shanghai hardfork allowed withdrawals from staking.



American crypto exchanges have been among the top platforms in terms of the outflow of funds in the last two months.



Kraken previously reached a settlement with the SEC, agreeing to pay a $30 million fine and close its staking services to retail investors. The current outflow is either due to qualified investors fleeing (the settlement didn't apply to them) or Kraken's failure to meet its obligations in full, which is the reason for another complaint that the regulator filed in November.

"$30m buys you about 10 months before the SEC comes around to extort you again," Kraken CEO Jesse Powell said in response to the new lawsuit.

Coinbase is second in terms of outflow after it refused to agree to a similar demand by the SEC to close access to staking. This site's massive outflow of investors from Ethereum is probably caused by the low yield of validators at 3.8% APY, which is significantly inferior to low-risk investments in US Treasury bonds. The annual yield on Treasury bonds is currently 5.2%.

The second reason is Ethereum's sluggish growth compared to both Bitcoin and a host of altcoins. Ethereum is 26% behind the leading cryptocurrency, and the ability to make passive income does little to compensate for this gap. Investors' last hopes this year were associated with the launch of an ETF for Ethereum futures in the United States in October, but those hopes didn't pan out.



Investors' general disappointment is also confirmed by the fact that Lido Finance is now in third place for the amount of outflow. It now accounts for 69% of the queue of outgoing validators.



The decline in overall investment attractiveness is also linked to the SEC transferring Ethereum to the category of securities immediately after the network transitioned to PoS, the growth of centralisation, censorship in the network and the dominance of Lido Finance in the staking pool.


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Binance's share of the spot market in 2023 has fallen from 57% in February to 32% in November. The US division, which at its peak had an 8% share of the regional market, must cease to exist under an agreement with the US Department of Justice. An independent overseer will stay at the global headquarters for three years to assess compliance with US and international laws.



The company must also pay an industry-record fine of $4.3 billion. This amount may increase, as the agreement with the Department of Justice was concluded without the SEC's participation. The regulator has issues with the crypto exchange because it deals with securities without having the appropriate licence. The SEC considers BNB to be a security, and court proceedings are still ahead.

The decline in market share, ongoing legal woes and loss of US market share have consequently affected the value of the cryptocurrency exchange's coin. BNB's price lost 6% in 2023 amid Bitcoin's doubling in value.



However, the confrontation between Binance and the US government has had two positive outcomes. First, there is no longer a risk of the crypto exchange going bankrupt and repeating what happened to FTX. The fine amount is sizeable but not a critical blow for the largest player in the cryptocurrency market. At the same time, the crypto exchange won't face charges that could damage its business.

As JPMorgan analysts wrote in a note to investors, "Binance's market share loss will be more moderate in the future and will probably reverse once the effects of the agreement are resolved".

Traders are already opening predominantly bullish positions in the derivatives market, causing the funding rate to rise and open interest to reach three-month highs.



Secondly, the departure of the crypto exchange that irritated American regulators so much opens the way for the approval of spot ETFs. The inflow of American investments will be directed toward more 'law-abiding' companies. However, legal action against Coinbase is still ongoing, and the SEC again has claims against Kraken, despite reaching a pre-trial agreement in February and the exchange paying a $30 million fine.

According to the Glassnode analytical agency, the emergence of spot Bitcoin ETFs will attract $60.6 billion from stock and bond ETFs and $9.9 billion from the gold market. The number of investors who consider Bitcoin to be 'digital gold' increases every year, and the current correlation between financial instruments is 0.65.



Riding Bitcoin's coattails, altcoins will also see higher interest. They currently account for 47.4% of the crypto market's total capitalisation.


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Binance CEO Changpeng Zhao's guilty plea to violating US laws and striking a pre-trial settlement, which includes an industry-record $4bn fine, led to widely-anticipated turmoil in the markets. In the 24 hours that followed, nearly $200 million worth of long positions across all crypto instruments were liquidated, with BNB buyers accounting for $4.4 million of this total.



The flames were fanned by tongues wagging, proclaiming the imminent demise of Binance in the wake of an exorbitant fine. The negative backdrop caused BTC to fall by 6% in the first couple of hours and drove BNB down by 12% – to $235.



They based their argument on the significant net outflow of funds from the crypto exchange, which according to various estimates ranged from $700 million to $1.7 billion in just 24-hours. The large difference between the estimates lies in the difficulty of identifying all the wallets associated with Binance and also the different calculation methodologies employed.

The largest negative result was found by Nansen, who calculated the $1.7bn figure on 21 November. However, this large figure is due to the overlapping of both asset outflows and the fall in the value of reserves due to the general correction on the crypto market. As a result, the reserve had grown by $1.3bn the very next day. In other words, the direct outflow of assets was much more modest.



A clearer picture is provided by the DeFiLlama service, according to which Binance's reserves decreased by $1.5bn over two days, while the outflow for the same period amounted to $710m.



However, the current rate of outflows is unremarkable from a historical standpoint. In June, after the SEC filed a lawsuit, it exceeded $1 billion within a single day, and in January, amid the scandal around the BUSD stablecoin, it hit a record high for the year – $4.3 billion.

All this shows that talk of a mass exodus of customer funds is simply invalid; the crypto exchange is only facing localised difficulties, as is the case in the USA or Australia.

If we talk about objective indicators of the stability of reserves and the degree of customer confidence, we have previously cited the research by analytics agency Glassnode as an example.



Binance has demonstrated a high degree of reliability, second only to Coinbase by some metrics, and surpassing it in others.


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