What to expect in crypto in February
Is February going to be a bullish or a bearish month for crypto?
Interestingly, February is historically one of the best-performing months for Bitcoin, with BTC having only 2 red February’s in its entire history.
For ETH, it has been even better, as ETH has only had 1 red February in its history.
However, at the same time, Bitcoin has never closed 6 consecutive months in the green, and for the past 5 months, it has been in up-only mode for most of the time.
But regardless of the BTC's upcoming price action, this month will be another one full of opportunities for narrative and news traders.
So here are a few major events that are expected to happen in February:
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First spot BTC ETFs in… Hong Kong?👀
Harvest Global Investments, a major asset-management company in China, applied for the first spot BTC ETF in Hong Kong a few weeks ago.
Venture Smart Financial Holdings, another financial giant, has already set the first quarter of 2024 as its target to launch the BTC ETF.
And on top of that, Hong Kong regulators have confirmed in December that they’re strongly considering accepting applications for a spot Bitcoin ETF.
Harvest Global Investments’s goal seems to be to launch the first Hong Kong spot Bitcoin ETF right after Feb. 10.
Sounds too good to be true, but maybe we’ll get a spot BTC ETF approved in Hong Kong this month.
What’s more, in case this happens, Venture Smart Financial Holdings has revealed that they plan to launch a spot ETH ETF in Hong Kong in Q2.
The launch of the spot Bitcoin ETFs in the US was certainly a big success, with their total net flows surpassing $1.5B despite the large selling pressure coming from Grayscale.
Hong Kong’s spot BTC ETFs would likely attract some significant amounts of money too.
Starknet token release
Starknet is a key project in the Ethereum L2 space.
It’s also one of the first ZK-Rollup Layer 2 networks built on top of Ethereum.
While there’s nothing officially confirmed, a lot of people who are very familiar with the Starknet ecosystem anticipate the $STRK token to go live in February.
The team behind the project confirmed that they took the snapshot for the token distribution over 60 days ago, so the token launch shouldn’t be far away.
Why does this matter?
Every time when a major L2 project announces the launch of its token, its ecosystem usually sees a surge in activity and TVL from that moment until the token generation event.
In Arbitrum’s case, for example, its TVL increased by $500M in one week after the ARB token launch was confirmed.
The prices of many Arbitrum ecosystem tokens also skyrocketed before the ARB token launch when the token was first introduced, followed by a gradual sell-off after the ARB token generation event.
(as the token launch ultimately proved to be a sell-the-news event)
The same thing might also happen with Starknet ecosystem tokens over the next weeks, so that’s something to keep in mind especially if you trade narratives.
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What’s more, they also made several other announcements regarding exclusive token rewards for early token adopters:
10% of the LISTA total supply will be airdropped to Lista supporters
A gamified point system campaign dubbed the Cosmic Adventure Challenge has been released
Season 1 of the Cosmic Adventure Challenge starts on Feb 5th and will end on Feb 29th. An airdrop for the participants of the challenge is confirmed.
To qualify, you have to complete one or several of the 6 quests available on the platform: provide liquidity to Lista, Borrow lisUSD, Deposit BNB on Synclub, mint slisBNB, Provide liquidity in lisUSDor slisBNB liquidity pools, and Create lisUSD and slisBNB trading volume.
Users who participate in Lista’s Cosmic Adventure Challenge in the first 7 days will receive bonus points for participation.
EigenLayer’s deposits reopening
Eigenlayer, the largest restaking protocol, will open deposits once again later today.
They removed the 200k ETH individual caps on LSTs, but now restaking points distributed to any liquid staking token or liquid restaking token are capped at a maximum of 33% of the total future issuance.
Personally, I’m farming EigenLayer airdrop with a relatively large % of my ETH holdings, as I think that this is one of the best yield opportunities for ETH right now.
I’ll publish a thread where I’ll cover a few restaking strategies that I’m using to maximize my ETH yield + airdrop allocations soon.
But, in short, I’m farming EigenLayer airdrop using 4 liquid restaking protocols:
Kelp DAO - There’s currently a 100k bonus in Kelp points per rsETH minted using Kelp for a limited amount of time (use my link for a 10% points boost when you restake ETH using Kelp)
Eigenpie - There’s a 2x Eigenpie points boost until Feb. 12 (there’s no referral bonus, but I’d appreciate it if you’d use my link)
EtherFi - get 20 more EigenLayer points per 1 staked ETH with EtherFi (+ get 1k additional EtherFi points per ETH restaked with my referral)
EigenLayer TVL currently sits at $2.1B.
It’s insane how fast it has grown this year, and with so many ecosystem airdrops being announced every week, I don’t expect the hype around it to die anytime soon.
Moving on, EigenLayer Stage 2’s final testnet is scheduled for Feb. 7.
Stage 2 will enable restakers to finally start delegating their ETH to operators who run Actively Validated Services.
Here’s a good overview of EigenLayer’s Stage 2:
Frax Finance’s L2 launch
Frax Finance is an ecosystem of DeFi products on Ethereum, with its most popular products including $FRAX stablecoin and a liquid staking token called frxETH.
Its team has been working on Frax’s own L2 blockchain for a long time, and it seems like its launch is now just a few days away. (February 7 is the estimated date)
Fraxtal (that’s the name of Frax’s upcoming L2) is not just another simple Optimism fork, as it will come with several interesting innovations:
Gas Token Flexibility - Fraxtal will use both frxETH and FRAX as gas tokens
Blockspace incentives - Users, apps, and devs will be rewarded for using the network with veFXS, the staked version of FXS
BAMM - a novel Borrow AMM (developed by Frax team) that will allow users to use leverage on any token without the need for oracles will launch within 1-2 months of Fraxtal going live on the new L2
Curve Finance and Ra (a DEX created by the Ramses Exchange team) have already confirmed their deployment on the Fraxtal
Frax Finance founder also made a bold prediction that he expects Fraxtal to attract several hundred million dollars in the first month.
Will see whether this happens or not.
There are still a lot of things about Fraxtal that we don’t know yet, but more details will likely be shared on the launch day.
Ethereum’s Dencun Upgrade final test
The final testnet launch for one of the most important upcoming Ethereum upgrades is scheduled for Feb 7.
If everything goes well, Ethereum’s Dencun Upgrade will likely go live on mainnet in March or April.
Dencun is a big deal primarily because it introduces proto-danksharding.
Proto-danksharding is expected to substantially reduce the transaction fees on L2s by lowering the “rent” that L2s have to pay to inherit Ethereum security.
L2s have grown a lot over the past 2 years, and if Dencun lives up to the community’s expectations, it will likely attract a lot of new users to Ethereum L2s as it will make them more affordable.
Major token unlocks
New month, new token unlocks.
Wu Blockchain made a great table that shows the largest token unlocks expected in February.
Two of them caught my attention in particular:
APT - $229M worth of APT (7.3% of its circ. supply) will be unlocked on Feb. 11
SAND - $94M worth of SAND (9% of its circ. supply) will be unlocked on Feb. 14
There’s also a $330M AVAX token unlock scheduled for Feb. 22. However, while this one is big in $ terms, $330M AVAX represents only 2.6% of the token circulating supply.
If you’re wondering what other major events will happen in crypto this month, take a look at the crypto calendar below.
A few other key dates to watch in my opinion are:
Feb. 13 - US CPI Data
Feb. 12 Next key date in Ripple-SEC lawsuit
Feb. 23 - Hearing of CZ (Binance founder)
And that’s all for today!
I’ll cover a lot of DeFi strategies in my newsletter over the next few weeks, so I highly recommend you subscribe if you haven’t already.
I hope that you found this issue helpful!
Until next time,
The DeFi Investor