Will ETH outperform BTC in Jan? IRS DeFi broker rules, and more: Hodler’s Digest, Dec. 22 – 28

Top Stories of The Week

IRS issues rules on digital asset reporting, says front-ends are brokers

The United States Internal Revenue Service (IRS) has issued final regulations requiring brokers to report digital asset transactions, expanding existing reporting requirements to include front-end platforms that facilitate transactions involving digital assets for customers, such as decentralized exchanges.

Set to take effect in 2027, the rules mandate that brokers disclose gross proceeds from sales of cryptocurrencies and other digital assets, including information regarding taxpayers involved in the transactions.

The final regulation says, “The only DeFi participants that are treated as brokers […] are trading front-end service providers.”

The document does not directly apply to all decentralized finance (DeFi) applications and their level of decentralization, focusing on front-ends as a source of information and tax disclosure.

US-listed Bitcoin, Ether ETFs tally $38.3B net inflows in launch year

United States spot Bitcoin exchange-traded funds racked up a staggering $35.66 billion in net inflows in 2024 — far exceeding early industry estimates — while the spot Ether ETFs finished strong, seeing net inflows of $349.3 million in the last four trading days to reach $2.68 billion since launch.

BlackRock’s iShares Bitcoin Trust ETF (IBIT) led the pack with $37.31 billion in net inflows, while the Fidelity Wise Origin Bitcoin Fund (FBTC) and the ARK 21Shares Bitcoin ETF (ARKB) rounded out the top three with $11.84 billion and $2.49 billion, respectively, followed by Bitwise Bitcoin ETF (BITB) at $2.19 billion, according to Farside Investors. 

These net inflows smashed an earlier $14 billion first-year estimate from Galaxy Digital’s research head Alex Thorn.

However, the spot Bitcoin ETFs didn’t finish too strong toward the year’s end, seeing a combined $1.33 billion in outflows since Dec. 19.

Five of the last six trading days were net outflows, with IBIT seeing its largest outflow of $188.7 million on Dec. 24.

Yat Siu X account breach likely part of a string of recent hacks: ZachXBT

Blockchain gaming conglomerate Animoca Brands confirmed the X account of its co-founder and chair, Yat Siu, was hacked and used to promote a fake token in what appears to be the latest in a string of attacks on crypto X accounts.

“Unfortunately [Siu’s] social media account has been compromised,” Animoca posted to X on Dec. 26. “The token launch on Solana as claimed in a post was made by the hacker.”

In the now-deleted post, Siu’s account shared a link to a token launched on Solana memecoin launcher Pump.fun called Animoca Brands (MOCA) — named the same as the firm and its affiliated Mocaverse non-fungible token (NFT) collection.

Pseudonymous blockchain investigator ZachXBT wrote on X that Siu “likely fell” victim to a phishing email from a threat actor behind a string of similar hacks and fake token posts that have netted $500,000 in the past month.

ZachXBT said the fake MOCA token “was deployed by the same address” as similarly faked tokens shared on other recently hacked crypto-focused X accounts.

MicroStrategy calls shareholders meeting to fund more Bitcoin purchases

Software company MicroStrategy called a special shareholders’ meeting to expand its equity-issuance plan and purchase more Bitcoin. 

According to a Dec. 23 proxy filing with the United States Securities and Exchange Commission, the company is seeking permission to increase the number of authorized shares for both Class A common stock and preferred stock, giving it more flexibility to issue additional shares as needed.

The first amendment seeks to raise the authorized Class A common stock from 330 million shares to 10.33 billion shares, while the second amendment aims to increase the authorized preferred stock from 5 million shares to over 1 billion shares.

Crypto hacks wipe out $2.3B in 2024, marking 40% YoY surge

Cryptocurrency hackers in 2024 surpassed the previous year’s achievements, stealing more than $2.3 billion worth of crypto from the Web3 ecosystem, a concerning sign for the industry’s mainstream acceptance.

Crypto hacks saw a sharp uptick, driven by the appeal of increasing cryptocurrency valuations after Bitcoin surpassed the $100,000 mark for the first time on Dec. 6.

Crypto hackers stole over $2.3 billion worth of assets across 165 incidents, marking a 40% increase compared to 2023, when hackers stole $1.69 billion worth of crypto, according to a report shared by onchain security firm Cyvers.

Winners and Losers

At the end of the week, Bitcoin (BTC) is at $94,337, Ether (ETH) at $3,317 and XRP at $2.14. The total market cap is at $3.28 trillion, according to CoinMarketCap.

Among the biggest 100 cryptocurrencies, the top three altcoin gainers of the week are Bitget Token (BGB) at 89.76%, Virtuals Protocol (VIRTUAL) at 27.12% and GateToken (GT) at 23.93%.

The top three altcoin losers of the week are Ethena (ENA) at 23.52%, Ondo (ONDO) at 21.44% and Aptos (APT) at 20.19%. For more info on crypto prices, make sure to read Cointelegraph’s market analysis.

Most Memorable Quotations

“PQ signature research will eventually produce conservative well-reviewed, more compact signatures, and Bitcoin can add those schemes as another option.”

Adam Back, co-founder and CEO of Blockstream

“A strategic digital asset policy can strengthen the US dollar, neutralize the national debt, and position America as the global leader in the 21st-century digital economy.”

Michael Saylor, co-founder and executive chairman at MicroStrategy

“I think Japan should follow the example of the United States and consider turning some of its foreign exchange reserves into crypto assets such as Bitcoin.”

Satoshi Hamada, member of the House of Councillors of Japan

“I’m happy to be adoptive father to Moo Deng as she grows up over the next 2y and support her with my 10M THB donation, maybe more as I set aside 88 ETH for [Moo Deng] + frens.”

Vitalik Buterin, co-founder of Ethereum

“I think BTC Dominance peaked and ALTs will start outperforming $BTC in the coming months. Finally we will see the true ALTs season soon.”

Aqua, pseudonymous crypto trader

“We can pay for the delivery of goods with digital financial assets. It is also possible to use Bitcoin, which we mined here in the Russian Federation, within the experimental regime.”

Anton Siluanov, Minister of Finance of Russia

Top Prediction of The Week

Analyst ‘wouldn’t be surprised’ if Ethereum outperforms Bitcoin in January

Ether is showing signs of breaking out relative to Bitcoin in January 2025, according to a crypto analyst.

TradingView shows Ether’s relative strength to Bitcoin — the ETH/BTC ratio — is currently at 0.0356. MN Capital founder Michael van de Poppe said in a Dec. 24 X post that he “wouldn’t be surprised if $ETH / $BTC breaks through 0.04 in January.” 

The last time the ETH/BTC ratio tapped 0.04 was on Dec. 8, when ETH traded just above the $4,000 psychological price level at $4,018.

Van de Poppe predicts that while there will be more inflow into Ether in January 2025, Bitcoin may see outflows, leading to its price consolidating. He expects this to set off an “altcoin run in the Ethereum ecosystem.”

Top FUD of The Week

Montenegro justice minister approves Do Kwon’s extradition to US

Terraform Labs co-founder Do Kwon’s extradition to the United States has been approved by Montenegrin Minister of Justice Bojan Božović after Montenegro’s Constitutional Court dismissed the former executive’s appeal.

The Ministry of Justice simultaneously rejected the extradition of Kwon to his country of origin, South Korea. According to a translated statement from news outlet Vijesti, Montenegro’s Ministry of Justice wrote:

“It was concluded that most of the criteria provided by law support the request for extradition by the competent authorities of the United States of America.”

The decision to extradite Kwon to the United States follows a lengthy legal battle that took several turns, in which the decision to extradite the Terraform Labs founder was reversed several times.

EU silence does not make USDT MiCA-compliant, says exec

The European Union’s cryptocurrency regulations are set to take full effect in just a matter of days, but there’s still a significant amount of uncertainty on Tether’s USDt stablecoin.

United States crypto exchange Coinbase delisted Tether’s USDt in mid-December, citing compliance with the EU’s Markets in Crypto-Assets Regulation (MiCA).

After Coinbase’s USDT delisting, the stablecoin has continued trading across the EU, with many exchanges apparently awaiting more clarity from European authorities on USDT’s compliance with MiCA.

EU regulators have not said whether USDt is compliant with MiCA, but this doesn’t mean the stablecoin is not seen as non-compliant in Europe, according to a member of the MiCA Crypto Alliance.

All I wanted for Christmas was my $773M BTC back

James Howells, an IT engineer from Newport, Wales, is fighting a high-stakes legal battle to recover a hard drive containing private keys to 8,000 Bitcoin — worth an estimated $773 million. 

The drive was mistakenly disposed of in a landfill, holds 2009-era Bitcoin, represents a fortune tied to the earliest days of the cryptocurrency market, and is currently barred access by the Newport City Council due to its environmental permit.

In an exclusive interview with Cointelegraph, Howells said the legal proceedings are ongoing and backed by a world-class legal team and advanced artificial intelligence technology trained in United Kingdom law.

Despite the estimated $773 million in holdings being thrown out in 2013, Howells remains optimistic and plans to compensate stakeholders, contribute to the crypto community, and potentially reinvest in blockchain projects — if he recovers the lost BTC.

Howells has assembled a legal team that includes a King’s Counsel, senior barristers, and a support team of solicitors and paralegals to argue his case.

He aims to gain access to the landfill site and retrieve the hard drive that was mistakenly discarded while complying with legal and environmental regulations for access.

Top Magazine Stories of The Week

Story Protocol helps creators survive AI onslaught with ‘programmable IP’ crypto

Story Protocol wants to make it as easy for AI firms to license and pay creators for IP and content as Netflix made streaming TV and movies.

Bitcoin payments are being undermined by centralized stablecoins

Satoshi did not try and build an easily censorable payments network built around centralized stablecoins tied to fiat, but that’s where we’ve ended up.

Women more bullish about blockchain games than men: Web3 Gamer

Women working in Web3 gaming are more bullish about the industry than men, plus we chat to Axie University co-founder Spraky.

This article first appeared at Cointelegraph.com News