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How to protect your crypto wallet

Security is one of the most important words in crypto. It's also one of the reasons why many people hesitate to invest in cryptocurrency. However, protecting your funds is easier than you think. There are several simple rules on how to protect a crypto wallet, which we will share with you in this article. Let's explore why keep crypto in wallets and how to protect your crypto wallet from hackers.

What is a crypto wallet?

Wallets are used for storing cryptocurrency. They store public and private keys and support cryptocurrency transfers through the blockchain. Depending on what wallet type you choose, you can interact with decentralised apps and buy and sell crypto assets.

Cryptocurrency transactions don't represent the process of sending crypto tokens from one smartphone to another. When you send cryptocurrency assets, you use private keys to sign the transaction and broadcast it to the blockchain network. It then includes your transaction to reflect the updated balance in your address and the one of the recipient.

So, using a crypto wallet doesn't equal storing assets like physical wallets. They function by reading the public ledger to reveal the balance in your address and holding private keys to let you make transactions.

Crypto wallet types



Before discussing tips and rules on how to protect your crypto wallets, let's learn about different types of wallets and which is the best fit for your needs.

Generally speaking, there are two main types of crypto wallets: Software-based hot wallets and physical cold wallets.

Hot Wallets

The main difference lies in the connection to the Internet. Hot wallets need an Internet connection to work smoothly, whereas cold wallets are mainly kept offline. It means the funds stored in hot wallets are more accessible to hackers than crypto assets in cold wallets.

The first and foremost recommendation to everyone wondering, "why keep crypto in a wallet and how to protect your crypto wallet from hackers?" would be not to store large amounts of your assets in a hot wallet. You can mitigate the risk of storing digital money in hot wallets.

Some of the most common examples of hot wallets include:

- Web-based wallets
- Mobile wallets
- Desktop wallets.

Cold Wallets

Cold wallets are kept offline. They are a less convenient way of storing your crypto assets but more secure. The two most common examples of cold wallets are paper wallets and hardware wallets.

Hot Wallet vs Cold Wallet: What's the Difference?

Both types of crypto wallets have their benefits and drawbacks. The best option depends on what you expect to get and how you'll use it. If you plan to trade daily, then the accessibility of the cryptocurrency wallet is important. In this case, hot wallets should be your best pick. On the other hand, if you need to store big amounts of crypto assets and pay a lot of attention to how to keep your crypto wallet safe, then it would be a wise move to invest in a cold wallet.



Other Types of Crypto Wallets

Besides the two most used crypto wallet types, there are several subtypes.

- A paper wallet is a physical location where a private or public key is printed or written down. It's one of the safest wallets to store cryptocurrency than keeping your funds in a hot wallet because there's no way for hackers to access these private keys. On the other hand, the risk of losing a paper wallet or destroying it may result in irrecoverable funds.
- A hardware wallet is an external device (usually a USB or Bluetooth device) that stores your keys. You can sign a transaction by physically clicking a button on the device that thieves can't access. A hardware wallet is the best crypto wallet to store crypto for people who don't need instant access to their crypto assets and feel fine about storing their cryptocurrency offline in a cold wallet.
- Most web-based wallets fall into the category of custodial wallets. You can often come across such crypto wallets being offered on exchange platforms. These are especially popular among beginners and are best known for their convenience and ease of usage. The main feature that makes custodial wallets different from paper and hardware ones is that you don't have full control over your tokens, and that's the exchange platform that holds private keys needed to sign for transactions. With that said, you should be 100% confident in the selected service and prevent unauthorised access using strong security measures, like two-factor authorisation, e-mail confirmation, fingerprint verification, etc.
- Non-custodial wallets provide you with full control over your crypto assets because the private key is stored locally with the user. When using a non-custodial wallet, you're commonly asked to write down and safely store a list of 12 randomly generated words. This phrase acts as a recovery mechanism that lets you access the funds stored in your crypto wallet whenever you lose access to your device.
- Using multi-signature wallets should appeal to everyone interested in how to protect crypto wallets. They authorise transactions using two or more private keys. Such solutions are especially useful for individuals worried about losing access to their wallets and seeking secure ways to sign their transactions. Multi-signature versions are available for all crypto wallet types described above.
- An NFT wallet is one of the safest wallets to store cryptocurrency. This is the place to store non-fungible tokens (NFTs). NFT wallets fall into two categories: hardware and software-based wallets.

Now that we've briefly reviewed all the major types of crypto wallets, let's see how crypto wallets work and how tosecureyour crypto wallet.

How does a crypto wallet work?

Cryptocurrency isn't stored in a wallet. Instead, crypto coins exist on the blockchain, and the crypto wallet lets you interact with the balances held there. A cryptocurrency wallet is an address that allows its owners to move coins elsewhere and lets others see the balance held at any given address.

Most used crypto wallets allow users to send, receive and store cryptocurrency. Some of them also have the feature to buy and sell crypto. Furthermore, depending on your wallet type, you can access extra features like decentralised applications (dApps) built on different networks, swapping between tokens, etc.

Each cryptocurrency wallet has its specifications and nuances in how it functions. However, in general, they're used for sending and receiving crypto coins, and it's suggested you take the following steps for sending and receiving crypto assets:

- To send funds, you need the public address of the receiving crypto wallet. Find your crypto wallet's "send" feature and enter the receiver's address. Next, choose the amount and type of crypto coins you want to send. Before sending big amounts of money, consider doing a small test transaction. Mind that sending crypto coins requires a fee paid to miners in exchange for proceeding with your transaction.
- You must retrieve a public key from your crypto wallet to receive funds. Find the "generate address" feature in your crypto wallet, click it and copy the alphanumeric address or QR code. Share it with the person who wants to send crypto to you.

Important note: When sending a cryptocurrency, always ensure you're doing it to an address of a wallet of the same type of cryptocurrency. For example, when sending Bitcoin (BTC), ensure that you're sending to a Bitcoin Cash (BCH) address. Otherwise, your funds will be lost.

How to choose a crypto wallet?

Choosing the best cryptocurrency wallet isn't only a matter of preference. It should also involve a series of pragmatic reasons, including but not limited to:

- Costs. Most used crypto wallets are free. However, hardware wallets commonly require a small investment. If you're going to hold your crypto coins for long, it's better to invest in a hardware cryptocurrency wallet and learn how to keep your crypto wallet safe.
- The volume and type of cryptocurrencies the wallet will hold. If you hold more than one type of cryptocurrency, you'd better consider choosing a crypto wallet featuring multi-currency support. If you're going to use the crypto wallet to send and receive one crypto coin, you should check on the developer's website to see if there's a dedicated wallet for your needs.
- Crypto wallet encryption.
- Are you prepared to trade daily?
- Is it important for you to access the crypto wallet quickly?

Cryptocurrency wallet safety

Security plays a significant role when you need to choose the best crypto wallet for your needs. It's important to carry out plenty of research about the crypto wallet's security features before making the final decision. If you need to ensure all your funds are safely stored, you'd better opt for a hardware crypto wallet.

With that said, let's see how to keep your crypto wallet safe.

How to protect your crypto wallet

The following tips should give you clear guidelines on the best way to protect your cryptocurrency and keep your crypto wallet safe. You may not need all of them. However, this list should help determine whether the crypto wallet is safe and what works best for you.

- Store your crypto assets in a cold, hardware crypto wallet. You may not need all the crypto assets that you own. It's always wise to store a small number of crypto assets in a hot wallet for transactions and keep the rest of those offline.
- Use reputable exchanges. Do your research to determine which cryptocurrency exchanges have ever been hacked. Don't put your investments at risk when choosing an exchange that can potentially put your crypto assets at the risk of a cyberattack.
- Set a complex password. Never reuse a password you already have on any other website or app.
- Avoid phishing attacks. Never log in to your cryptocurrency exchange unless you're sure you are on the correct website. Save the URL address to favourites and consider using it rather than clicking on the links randomly sent to you. This is one of the best ways to protect your cryptocurrency.
- Don't use public Wi-Fi to access your cryptocurrency exchange or your crypto wallet. Instead, maintain your online privacy by using a VPN service.
- Make sure that your device and all software installed on it are always updated.

Safety of StormGain crypto wallet

StormGain gives you access to free, multi-currency wallets right after the signup (https://stormgain.com/easy-start). Our built-in crypto wallets make trading and exchanging cryptocurrency faster and safer than before. It takes seconds to get started and access 10 secure crypto wallets right after the registration. Thanks to the two-factor authentication, strong encryption and industry-leading security protocols, you may rest assured your crypto assets are always kept safe.

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JPMorgan: Bitcoin spot ETFs to be approved by 10 January

Bitcoin is once again approaching a six-month high of around $30,000, gaining 13% in October.



This growth is due to the approaching deadline for approving Bitcoin spot ETF applications and the SEC's refusal to appeal the court's decision on Grayscale.



The regulator became famous for its negative attitude towards cryptocurrencies and instruments based on them. In August, the SEC learned its lesson from a federal appeals court that dealt with the case about the regulator's refusal to convert a Grayscale Bitcoin trust into a spot ETF. The judges called the regulator's position "arbitrary and capricious" due to the lack of clear reasoning.

SEC could have appealed this decision by providing new evidence to explain the refusal. However, the deadline for an appeal was 20 October. This dramatically increases the chances for automatic conversion of the Grayscale fund in 2024 and the emergence of spot ETFs from other applicants. JPMorgan analysts suggest that the SEC will approve all applications in bulk by 10 January so as not to give a competitive advantage to any of the players.

The emergence of Bitcoin spot ETFs will likely lead to a cryptocurrency rally. The world's largest investment company, BlackRock, which also applied to create an ETF, manages $10 trillion. 1% of the funds in its management that can be used to diversify the portfolio accounts for 1/6 of Bitcoin's current capitalisation.



The inflow of institutional capital will ensure significant cryptocurrency growth. In 2021-2022, institutional investors were the main reason behind Bitcoin's growth from $10,000 to $60,000. The Grayscale Trust Fund alone has bought 300,000 BTC (about $9 billion at current prices) despite the fund having significant cons against spot ETFs.



According to Skybridge Capital's Head, Anthony Scaramucci, after the long-awaited ETF approval, the long-term Bitcoin capitalisation will increase from $600 billion to $15 trillion, with the asset's price jumping to $250,000 in the new cycle and $750,00 by the decade's end.


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Rags to riches: MicroStrategy is about to make $1 billion in profits

MicroStrategy, the largest public Bitcoin holder, epitomises the buy-and-hold strategy in the cryptocurrency market. The company made its first purchase in September 2020 for $11,600 a coin and continued to add to its holdings once a quarter.

It held onto its subsequent purchases during both market rises and falls. The media began to bury MicroStrategy after the May 2022 crypto collapse, when the market price dropped way below the average value of Bitcoin in its reserves ($30,700 at the time).



Despite the difficult times and some forced measures to refinance part of the company's liabilities, MicroStrategy's Executive Chairman, Michael Saylor, held to the strategy. In a June 2022 interview, he called Bitcoin "a lifeboat in a storm", referring to rising inflation and an upcoming financial crisis.

After waiting for the drop in Bitcoin's price to slow, MicroStrategy returned to buying. This allowed it to reduce the average price of the BTC it held. The current average cost per coin is $29,870, which is way lower than Bitcoin's current price.



In terms of reserves among public market players, the company is the absolute leader, holding 158,245 BTC. It's spent a total of $4.7 billion on the cryptocurrency, while its portfolio value is currently worth $5.4 billion for an unrecorded profit of over $0.7 billion.



Michael Saylor has repeatedly stated that cryptocurrency is a more progressive asset than traditional financial instruments. In three years, Bitcoin's price increased by 147% (as of 20/10/2023), while the S&P 500 gained only 26%, and bonds and precious metals are showing negative trends.



Over the past 24 hours, Bitcoin skyrocketed by 10% to $34,500.



The breakthrough is due to a significantly increased chance that Bitcoin spot ETFs will be approved in the US in the next 10 weeks. If they are approved, it would pave the way for institutional capital to participate. The volume of subsequent investments in cryptocurrency in the first six months alone is estimated to be $100-$200 billion, leading to the asset undergoing significant strengthening.


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Open interest on the CME sets a record of 100,000 BTC

The anticipation that a spot Bitcoin ETF will soon appear in the United States is fuelling investment interest in the cryptocurrency. Both retail traders and institutional investors are showing signs of renewed activity. Open interest in futures on the Chicago Mercantile Exchange (CME) exceeded the previously unseen level of 100,000 BTC, and daily trading volume reached $1.8 billion.



The activation of institutional players can also be seen in the inflow of investments into various ETFs around the world. Last week, $55 million was invested in Bitcoin, and a more significant jump is expected to be seen in this week's totals.



This has been brought on by two recent events. The first is that the SEC refused to respond to Grayscale's appeal, which significantly increases the chances of converting the trust fund into a spot ETF. The second event is the emergency of preliminary information about a new ETF from BlackRock, which was assigned the ticker symbol IBTC and appeared on the website of the Depository Trust and Clearing Corporation (DTCC). Investors interpreted this news as a sign that spot ETFs would be quickly approved, after which Bitcoin's price reached $35,000.



Traders on crypto exchanges holding short positions were caught off guard. Over the course of 24 October, their total losses exceeded $300 million.



Now, few are risking a move towards selling, which is why the financing rate has moved into positive territory. Some analysts even cautioned against opening new buy trades since market makers could be exposed to possible price manipulation when futures positions are skewed in the absence of significant trading volume.



However, everyone sees a positive scenario in the long term, assuming that ETFs are approved. For example, Charles Yu of Galaxy Digital Research used the dynamics of the inflow of investments in gold ETFs for his forecast but adjusted for the difference in capitalisation. According to his calculations, in one year, Bitcoin's capitalisation will approach $1 trillion, and the price per coin will reach $59,000.



The nearest approval deadline for the launch of a spot Bitcoin ETF is 10 January 2024.


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Solana overtakes Bitcoin in terms of growth in investments in crypto funds

In October 2023, the crypto market has been seeing a significant revival expressed both in the growth of retail trade and activity among institutional capital. Crypto funds are recording a 44.3% increase in daily trade volume compared to September.



At the same time, the total amount of assets under management (AUM) increased by 6.7% to $31.7 billion.



As expected, most of the funds were accumulated by Bitcoin, which holds a 73.3% share of large players' interest, worth $23.2 billion.



However, there's been a change in sentiment regarding altcoins. Ethereum remains the second-largest coin in terms of investment attracted, coming in at $6.4 billion. However, compared to September, it's seen an outflow of funds and a decrease in its share from 22.6% to 20.1%. In contrast, Solana is seeing a 74.1% growth in incoming funds to $140 million.



Interest in Ethereum is falling both for internal reasons (increased centralisation, reduced staking profitability) and because of moves by the SEC (preventing the promotion of staking in the United States, labelling the altcoin a security).

In recent SEC claims, Solana has also been designated as a security, but this hasn't prevented the project from attracting large companies to work with it. In particular, the e-commerce giant Shopify has added the Solana Pay service to its list of payment methods (currently, settlements are available only in USDC). Visa also uses the blockchain network to conduct faster and cheaper settlements in the interbank market.



In addition to Solana's good prospects for expanding its business, it is also attracting investors due to its low entry barrier. In 2022, the cryptocurrency's price plummeted by 94% to $10 per coin.

This strong decline was caused by a number of joint projects implicated in FTX's collapse. The failed crypto exchange's accounts still contain nearly $2 billion worth of SOL. A court decision recently authorised Galaxy Digital to oversee the liquidation of FTX's assets. According to Galaxy Digital, it will set a monthly limit of $100 million in order to minimise the negative impact on Solana's price.


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Bitcoin hits new highs in Argentina, Turkey and Nigeria

For some developing countries, inflation is an extremely acute economic problem that indicates a rise in the cost of goods and a drop in the population's purchasing power. The countries experiencing the highest inflation today are Venezuela (360%) and Zimbabwe (315%).



Inflation is generally caused by short-sighted political decisions. In Turkey, the rise in prices was caused by President Recep Erdogan's refusal to tighten the country's monetary policy. The low key interest rate and high government spending caused the economy to overheat, leading to skyrocketing inflation from 20% in mid-2021 to 80% in mid-2022.



As a result, Turkey faced a significant increase in the prices of imports, and even Bitcoin, which is still trading at a 50% discount from its all-time high, has set new highs against the Turkish lira.



Turkey authorities are putting up all kinds of roadblocks in the way of cryptocurrency's penetration into the economy. In 2021, the country banned the exchange of lira for digital assets and vice versa. As such, despite Turks' strong interest in cryptocurrencies, the country has not become a new crypto hub.

Things are a bit better in Argentina, whose population is also suffering from high inflation and devaluation. Argentines try to exchange spare pesos for Bitcoin or stablecoins as soon as possible, which is why the country leads Latin America in crypto transactions with $85.4 billion a year.



One of the possible solutions to the economic crisis offered by politicians is the rejection of the national currency and the transition to settling financial transactions in US dollars. But El Salvador's president, Nayib Bukele, whose country has already travelled down this road, advises moving to Bitcoin instead of the dollar. Michael Saylor, head of MicroStrategy, the world's largest public holder of Bitcoin, shares a similar opinion.



Digital assets have a higher degree of penetration in countries with high inflation. In Argentina, for example, at least 11% of the total population uses cryptocurrency, while that figure stands at 4.2% globally.


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5 events to follow as a crypto investor

Binance trial

Binance is the largest crypto exchange, with a 52% share in the derivatives market. But its share in the spot market declined from 55% to 34% in 2023. This was due to American regulators who limited the American division's operation and sued the company and its CEO.



The key risk lies in the Department of Justice joining the SEC's lawsuit, bringing with it more serious charges. According to Bloomberg, the crypto exchange is accused of breaching securities law, tax evasion and helping regional players circumvent international sanctions. These accusations will result in global payment systems refusing to cooperate with Binance, and given its weight, it'll affect the crypto market negatively.

SEC vs altcoins

SEC Chairman Gary Gensler has repeatedly stated that he's prepared to recognise only Bitcoin as a commodity. Other coins, in his opinion, must be regulated by securities law. Under pressure from the SEC, some American crypto exchanges stopped providing staking services. That led to Ethereum lagging behind Bitcoin by 27% in 2023.



The Coinbase crypto exchange strongly disagreed with the regulator's position, so it continued to provide staking services and is ready to defend doing so in its upcoming case. If it wins, Ethereum and some other major altcoins will get a powerful growth boost.

Spot Bitcoin ETFs

A real crypto hype and the onset of the new rally are expected with the emergence of the first spot Bitcoin ETFs in the US. The application deadline expires on 10 January 2024, with one of the applicants being BlackRock, the largest global investment company with $10 trillion in management.



According to Skybridge Capital, if ETFs are approved, the unmet high demand for Bitcoin from institutional investors will lead the price to skyrocket to $250,000 in the new bull cycle.

April 2024 halving

Speaking of the potential crypto hype, it's worth mentioning the upcoming halving of the block mining reward. In April 2024, it'll decline from 6.250 BTC to 3.125 BTC. Reducing issuance is a powerful deflationary factor that fosters the asset's price growth.



The circulating supply has been declining since 2020, and more and more coins are settling in cold wallets until better times. With the emergence of ETFs in the US and halving, a supply shock is inevitable. According to Ark Invest's optimistic forecast, Bitcoin will grow in price to $1.5 million by 2030.

The US Federal Reserve's monetary policy

Since the US is the world's largest economy, its financial policy affects the whole globe. Because inflation accelerated in 2022, the Fed started hiking its key interest rate, which resulted in a global outflow of funds from risky assets (including crypto) into US Treasury bonds.



However, more and more economists agree that the Fed will soon do a 180. Because the rate is high, interest expenses on servicing the national debt reached $1 trillion or 4% of GDP, and for the first time in 20 years, they exceeded defence spending. If the regulator lowers the key interest rate, it would support the crypto market's growth.


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Weekly inflow into crypto funds exceeded the annual level

Existing exchange-traded crypto funds are seeing high demand for crypto's. Last week, the net annual inflow totalled $260 million, while $326 million in investments came in during the same week.



This is primarily because institutional investors are interested in Bitcoin, which received $296 million or 90% of the total inflow volume. Solana is second with $24 million (we've previously covered the reasons behind the interest in this altcoin). In this environment, Ethereum is looking dull and continues to lose investments.



The spike in interest in Bitcoin is due to the increased chances that spot Bitcoin ETFs will be approved in the US before 10 January 2024. Last week, information emerged that ETF applicants had sent revised documents. This signals that a dialogue is taking place between market participants and the SEC.



The SEC also refused to appeal a court decision on Grayscale's claims. This greatly increases the likelihood that the trust fund will automatically convert to a spot ETF next year.

For these reasons, Bitcoin's price rose by 10% last week, consolidating around $34,000.



In contrast to the growth at the beginning of this year, market participants believe the chances of it continuing in Q4 are high. This is evident in the renewed outflow of coins from cryptocurrency exchanges since May, indicating that only a few market participants are willing to part with Bitcoin despite its higher price.



Bitcoin was recently praised by one of the best hedge fund managers in the world, Stanley Druckenmiller, whose average annual return over 30 years of fund management is 30%, surpassing the results of even Warren Buffett. Druckenmiller said:

Young people look at [Bitcoin] as a store of value... It's a brand. So, I like [Bitcoin and gold]. I don't own any Bitcoin, to be frank, but I should.


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Why Solana doubled in price in 40 days

Since October, Solana's price has doubled to $42 per coin, reaching a market capitalisation of $17.5 billion. SOL is fourth in the overall altcoin rating (excluding stablecoins) and second in terms of daily trading volume.



Solana is the top altcoin in terms of investment volume in crypto funds due to high interest among institutional investors. Over the past 12 months, $98 million has been invested in Solana funds, while $125 million has been withdrawn from Ethereum funds.



Back in August, we talked about the coin having growth prospects as the project continues to grow its business connections. The Solana Pay service was first added by e-commerce giant Shopify, and later, it was revealed that Visa was using the blockchain for faster and cheaper transactions in interbank exchanges.



In late October, interest in Solana was fuelled by a report from investment firm VanEck, which has $76 billion under management. The report detailed that the base case scenario sees the coin rising to $335 and that the bullish scenario forecasts growth to $3,211 by 2030.



According to VanEck analysts, Solana has a better chance than other blockchains of creating a "killer app" with over 100 million active users. Both the highest bandwidth and ultra-low transaction fees contribute to this.



A significant gap from competitors will be provided by the new Firedancer validator client, which is currently undergoing testing and is expected to be deployed in the first half of 2024. According to Solana Founder Anatoly Yakovenko, Firedancer will be a cure for the "curse" manifested in frequent network failures. Last year, they occurred on average every two months, and in February 2023, the network was down for 19 hours.



But Solana's prospects aren't that sunny. First, the sale of $2 billion worth of SOL from the accounts of the bankrupt FTX began. The liquidator announced a limit of $100 million per month in order not to negatively impact the price. Second, VanEck recognises that because Solana's architecture is so complex, implementing Firedancer doesn't guarantee that there won't be any critical bugs in the future.


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Bitcoin appreciates 93% versus gold in 2023

Renewed interest in cryptocurrencies has led to a record inflow of institutional capital into exchange-traded funds and really put a gap between Bitcoin and traditional investment instruments such as stocks and gold. Ethereum's price rose by 39% against the precious metal, while Bitcoin's saw an impressive 93% leap.



Support from hodlers, who have been accumulating again since January 2023, has played an equally important role. By October, they had reached accumulation levels of 50,000 BTC per month, and now, their aggregate reserves are approaching 15 million BTC.



Because crypto enthusiasts believe in Bitcoin's future growth, the crypto saw only a 20% drawdown in 2023 compared to a 36% drop during the 2017 rally.



Thanks to macroeconomic support that could come from the potential resolution regarding spot Bitcoin ETFs in the United States, BTC's share of the cryptocurrency market has grown to 53%. On the other hand, that indicator has decreased for Ethereum, other altcoins and stablecoins.



Yesterday, Fidelity's Director of Global Macro, Jurrien Timmer, called Bitcoin a "commodity currency" and "exponential gold". In his opinion, gold is "too clunky", so investors are increasingly considering Bitcoin as its replacement.

For reference: According to Fidelity's website, as of 30 September 2023, the firm has assets worth $11.5 trillion under its management. The company has previously submitted an application to the SEC to launch a spot Bitcoin ETF.



Fidelity is far from the first investment company to recognise the shift in large investors' interest from gold to Bitcoin. Analysts at Bank of America and JPMorgan had previously come to similar conclusions.

The cryptocurrency's active expansion is constrained by the lack of clear regulation and high volatility. However, over time, the former issue will be resolved by legislation, and the second will be levelled as BTC's capitalisation grows.


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Bitcoin hits new highs

Renewed interest in cryptos led to new one-year and all-time highs. The net inflow of capital into digital assets over the past 30 days reached $11 billion, which is the best result in 2023.



Over the past six weeks, $767 million of institutional capital flowed into crypto funds, exceeding the $736 million seen in all of 2022. This is the best level since the end of 2021 when the bull market went into decline.



The influx of fresh capital and the reluctance of long-term hodlers to part with their reserves has less to a new high for the number of addresses containing more than $1,000 in BTC. There are now over 8 million such accounts.



CME's open interest in Bitcoin futures on the Chicago Mercantile Exchange is at $3.7 billion, its best level since December 2021. This once again testifies to the increased interest among large capital and the formation of steady demand for the crypto.



The price is at its highest level in 18 months and is currently testing the resistance level at $35,000.



The network hashrate is growing by leaps and bounds. This year, it's increased by 75% to 470 EH/s. By comparison, over the past year, it rose by just 50%. In the absence of a technological revolution, this speaks to an ongoing 'arms race' in the industry and miners bringing additional equipment online.



There are a variety of reasons for interest in the crypto, including the expected appearance of the first spot Bitcoin ETFs in the United States, the upcoming halving event in April 2024, a reduction in the circulating supply, and the Fed potentially reversing its monetary policy.


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Bitcoin faces a potential supply shock

Due to the influx of new investors and the unwillingness of hodlers to part with their coins, it's becoming increasingly harder to find available Bitcoin. Currently, 68.8% of coins from the circulating supply have remained idle in wallets for over a year, while 57.1% have stayed idle for over two years.



The deficit will soon become even worse as short-term holders (STH) who were lucky enough to buy coins earlier this year reduced reserves to 2.4 million BTC. This group is prone to emotional swings when their rise in unrecorded profits and the risk of a potential correction from a significant price level push them to sell their coins. However, if the cryptocurrency continues to strengthen, STH will resume buying coins amid FOMO (fear of missing out on lost profits).

Long-term holders (LTH), on the other end, are buying Bitcoin up this year. They've taken their reserves to 14.9 million BTC. Hodlers are currently withdrawing coins from the market at a speed of 26,100 BTC a month.



If we talk about sentiment broken down by wallet volume, we can see that there is an active coin accumulation taking place, with coins going from shrimps (<1 BTC) to whales (<1,000 BTC).



This all indicates that most market participants are confident about Bitcoin's future growth.



Interest is fuelled by the potential launch of a spot Bitcoin ETF in the US, the arrival of which would allow trillions of dollars of institutional capital to use the cryptocurrency as an investment asset.

Julia Leung, Chief Executive Officer of the Securities and Futures Commission of Hong Kong, recently told Bloomberg that retail investors' access to spot Bitcoin ETFs is being considered. According to BitMEX co-founder Arthur Hayes, such a move would create "terrific competition" and force the SEC to take more action.

Given the decline in the liquid supply of Bitcoin caused by hodlers and the upcoming halving event, the launch of the spot Bitcoin ETF in the US will create a supply shock, and the deficit will result in a significant price increase.


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Why Bitcoin's fee soared from $0.50 to $8 and will continue to grow

A month and a half ago, the price of a simple transfer was under 50 cents, despite the record-high number of transactions. We gave a detailed explanation of the causes of this phenomenon in our previous article.



The number of transactions has now returned to the same level, but the commission for a simple transfer has increased 16-fold.



The reason for this lies both in the increased number of those wishing to buy/exchange Bitcoin and in renewed interest in Ordinals.



Ordinals are now essentially represented by JSON text messages, which are quasi-tokens. This is similar to ERC-20 in the Ethereum network. If Shiba Inu stands out among these in Ethereum's network, for the Bitcoin network, those would be ORDI or PEPE.



Text ordinals don't take up much space in a block. As a result, in early autumn, the large volume of transactions didn't result in a higher commission. The ordinals were well interspersed between ordinary transfers, taking only unused space. Now, after a surge of interest in Bitcoin, the demand for both the former and the latter has increased. Binance played an important role in the hype by listing ORDI.

The network's average fee is already more than $10 and will continue to grow as some market participants are growing interest in quasi-tokens. The creator of the Ordinals protocol, Casey Rodarmore, previously apologised to users for the innovation, calling 99.9% of quasi-tokens spam.



The only benefit that the traditional Bitcoin community sees in the spread of ordinals is higher earnings for miners.



Due to the high network load, users increase the fee amount to have their transactions included in the blockchain as soon as possible. The revenue for processing transactions jumped in November from 4% to 17% of the block mining fee.


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(platform for trading, exchanging and storing cryptocurrency)

[stormgain]

Ripple challenges BNB for fourth place

In 2023, Ripple's capitalisation more than doubled to $37.2 billion. The SEC's weakening stance, which began its attacks on altcoins with XRP, and the company's new high-profile projects helped make this possible.



The regulator labelled XRP a security back in 2020 when it sued the company for allegedly illegally raising $1.3 billion in investments. The legal battle went on with mixed success until Ripple's lawyers found the regulator's weak spot: a speech by former SEC Director William H. Hinman, in which he referred to Bitcoin, Ethereum and XRP as commodities.



In 2023, Ripple sought Hinman's reports and a transcript of the speech through the court. The SEC built a defence around this being the "personal opinion" of a man who was "difficult to identify from the video". Investors sensed an imminent victory in May, and XRP skyrocketed 9% in 12 hours.



The market reacted even more to a court verdict in July when a judge ruled that selling XRP to retail investors didn't qualify as securities trading. On the same day, some crypto exchanges announced the return of XRP trading pairs, and the coin's price jumped by 70%.

After four years of litigation, the SEC backed down in October, withdrawing its claims that Ripple issued securities directed against CEO Brad Garlinghouse and Executive Chairman Christian Larsen.

A series of SEC court losses, including the high-profile scandal over the refusal to convert Grayscale's trust fund into a Bitcoin ETF, have exposed the regulator's weak position. The chances that the SEC will finally drop its claims against Ripple have increased several-fold this year.



Meanwhile, the company's management has wasted no time. HSBC, one of the world's 20 largest banks by capitalisation, recently announced a partnership with Metaco, a subsidiary of Ripple. Metaco will provide a solution for the bank to store tokenised securities.

Ripple also won the competition to become the sole technology partner of the National Bank of Georgia. The company will help the government issue and customise the circulation of the digital lari, the country's central bank digital currency. Montenegro, Palau and Bhutan had previously chosen Ripple for the same purposes.

Ripple's growing adoption significantly increases the chances of its imminent return to the Top 4 cryptocurrencies by market capitalisation. A major surge in investment interest is expected when the SEC withdraws its legal action against the company.


StormGain Analytical Group (https://stormgain.com/)
(platform for trading, exchanging and storing cryptocurrency)

[stormgain]

BlackRock restores interest in Ethereum

For Ethereum investors, 2023 was a tough year as the SEC boosted efforts to label the cryptocurrency a security. The regulator's efforts led to a host of market participants, including Kraken, ceasing to provide staking services. As a result, the altcoin's value declined by 25% against Bitcoin over the course of the year.



In terms of institutional capital inflow into ETFs, it lost to Solana, XRP, Cardano and Litecoin, showing an annual outflow of $125 million.



Even the staking boom ended as the 4% yield couldn't cover losses from Ethereum's weak growth. As such, by October, the long queue of people wanting to become validators had already shrunk so much that the waiting time was reduced from forty days to less than one day.



However, the world's largest asset management company, BlackRock, renewed interest in Ethereum by applying through Nasdaq for a spot ETF on 9 November. The price skyrocketed by 8% to $2,050 on the same day.



Some analysts believe that an investment giant applying for an altcoin ETF signals the inevitable adoption of spot Bitcoin ETFs. This will be a huge step for the crypto industry towards institutionalisation.

On 10 November, Coinshares' Head of Research, James Butterfill, reported that annual institutional capital inflows into Bitcoin reached $1 billion last week, with $424 million of that invested over the past 30 days. For Ethereum, the outflow of funds turned into an inflow.



Due to the jump in interest in Ethereum, the average fee shot to $11 on 9 November, even though it didn't exceed $2 a month ago.



BlackRock's interest in Ethereum gives hope that the altcoin's positions will be restored. Coupled with increased profitability due to higher fees, it'll attract new investors.


StormGain Analytical Group (https://stormgain.com/)
(platform for trading, exchanging and storing cryptocurrency)