Daily News | On-chain DeFi TVL Exceeding 100 Billion; The Outflow of Grayscale GBTC Slows Down; The Expectation of the Fed's Interest Rate Cut Continues to Decline

Crypto Daily Digest: The outflow of Grayscale GBTC has slowed down, with the total market cap of cryptocurrencies exceeding $2.1 trillion and DeFi TVL reaching a new high since June 22

Firstly, let’s look at the inflow and outflow of Bitcoin ETFs. According to BitMEX Research, the net inflow on Friday (February 23) was $232.3 million. In addition, the outflow of funds from GBTC was only $44 million, the lowest level since January 11, indicating a withdrawal slowdown.

As of the end of January, the total withdrawal amount reported by GBTC was $5.64 billion, with a significant outflow of $640 million on January 22 alone. The outflow of funds in February has decreased, and since its establishment, GBTC has cumulatively withdrawn $7.4 billion.

In contrast, BlackRock’s IBIT has accumulated over $6.6 billion in investments since its launch, followed closely by Fidelity’s FBTC, with a total capital of over $4.7 billion. Ranked third is ARK 21Shares, with inflows of $1.4 billion during the same period.

Meanwhile, Bitcoin futures open interest contracts (OI) reached a new high for the year, hitting the level last seen in 2021. This indicates increased trading activity around the cryptocurrency with the largest market value.

According to DeFiLlama data, the on-chain DeFi TVL has reached its peak since June 2022, exceeding $100 billion but still not surpassing the peak in December 2021. Among them, Ethereum accounts for over 48 billion, Layer 2 Arbitrum accounts for about 3 billion; and Solana has an on-chain TVL of 2 billion.

In recent active DeFi protocols, Eigenlayer TVL has exceeded $8 billion, with a monthly growth rate of over 300%; Blast TVL reached $2 billion. In recent active DeFi protocols, Eigenlayer TVL has outstripped $8 billion, with a monthly growth rate of over 300%; Blast TVL reached $2 billion.

Presently, the total market cap of cryptocurrencies is over $2.1 trillion, with a 24-hour increase of 1.3%. Among them, the BTC market share is 48.3%, and the ETH market share is 17.8%.

Macro: US inflation data may continue to lower expectations of interest rate cuts, the US dollar strengthening, and gold prices slightly falling; Hedge funds bet on yen bears, putting pressure on the yen

On February 26 (Reuters), the US dollar strengthened as much important economic data is expected to be released this week. It will provide further clues to the global interest rate outlook, with US inflation data becoming the focus.

The core personal consumption expenditure (PCE) price index, as the Federal Reserve’s inflation indicator, will be released on Thursday, with an expected monthly growth rate of 0.4%. Recently, the continuous higher-than-expected producer and consumer prices in the United States have led to an upward risk in the PCE price index data, further pushing down the expectation of a significant interest rate cut by the Federal Reserve this year.

According to the CME FedWatch tool, the market believes that the likelihood of the Federal Reserve relaxing interest rates in May is slightly higher than 20%, compared to 90% a month ago.

Impacted by the lower expectation of the Federal Reserve’s interest rate cut, oil declined in early Asian trading. Although the Hussein armed forces allied with Iran continued to attack shipping in the Red Sea, the war between Israel and Hamas did not seriously constrain oil supply.

White House National Security Advisor Jake Sullivan told CNN on Sunday that negotiators from the United States, Egypt, Qatar, and Israel reached a protocol on the basic outline of the hostage protocol during the Paris talks, but negotiations are still ongoing. Israeli Prime Minister Benjamin Netanyahu said it is currently unclear whether a protocol will be reached.

Gold prices fell slightly on Monday, with the strengthening US dollar putting pressure on it. Investors are waiting for further clues on the timing of the first rate cut by the Federal Reserve/Fed this year.

Currently, spot gold has fallen 0.3% to $2,030.9 per ounce. US futures fell slightly by 0.4% to $2,040.6 per ounce.

The latest data from the Commodity Futures Trading Commission shows in the week ending February 20, funds increased their net short positions in the Japanese yen from over 111,000 in the previous week to over 120,000, equivalent to using $10 billion in leverage to bet on a weaker yen.

The reason may be that the performance of the Japanese yen is in a downward trend, and the exchange rate against other major currencies is hovering at historic lows. Calculated on a trade-weighted basis, it is also on the verge of reaching a new low for decades.

The national consumer price data for Japan will be released on Tuesday and is expected to show that the annual core inflation rate slowed to 1.8% in January, the lowest since March 2022.

This will make the plan of the Bank of Japan (BOJ) to end negative interest rates in the coming months more complex, thereby continuing to put pressure on the yen in the short term.

The yen-to-dollar exchange rate finally rose slightly to 150.40 per dollar, and due to the huge interest rate difference between the US and Japan, the yen-to-dollar exchange rate has fallen by more than 6% this year. The Bank of Japan naturally does not want investors to show bearish sentiment, so let’s see how to implement the strategy of rescuing the market in the future.