What's Driving Token Prices? January 10, 2024

Katie Talati
Jan 12, 2024

Join Katie Talati, Arca’s Head of Research, weekly on Wednesday at 4PM EST / 1PM PST as she shares notable token activity over the past week and her insights on what market events drove these token price movements.

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  • ATOM (-2.7%) - A new Cosmos proposal is currently in the voting stages that will dictate the future of the interoperability protocol’s tokenomics. For some time, Cosmos’s token ATOM, suffered from inflation pressure and could not capture value even though the project is widely used and has multiple app chains utilizing Cosmos’s infrastructure. The proposal aims to reduce inflation to 0% if staking utilization exceeds 67% (i.e. the amount of staked ATOM is greater than 67% of circulating supply). In November, a governance vote reduced staking inflation from 14% to 10%. The proposal was staunchly fought within governance and barely passed, and this latest proposal could face similar opposition.
  • MATIC (-1.2%) - Yesterday, layer-2 project, Polygon announced that it has partnered with Fox Corporation to build Verify. Verify is an open source protocol for content and image verification. The product is designed for media companies to easily register videos, photos and other content so consumers can verify that the images are not AI- generated and come from actual media sources. Verify launched in a closed beta in August of 2023 with Fox News groups uploading 89,000 pieces of content. The protocol is now open and available to the public and other media companies.
  • HNT (+5.5%) - On Monday, decentralized wireless provider, Helium, implemented onboarding fees for Helium Mobile hotspot providers. Helium Mobile, which allows users to run hotspots providing 5G wireless access, will now require onboarding fees for hotspot providers. To activate a new hotspot, users must spend a 50/50 allocation of data credits (created from HNT tokens) and MOBILE tokens (the subDAO token of Helium Mobile). Using data credits and MOBILE tokens should lead to greater burns for the HNT token. These fees, which are $20-$30, will likely be paid for by manufacturers of the hotspot devices and will not be passed on to the hotspot user. Currently, the wireless network has 3,600 hotspots live. 
  • BTC (+7.1%) - Yesterday, a tweet from the SEC’s X/Twitter account caused a stir as it proclaimed that it granted approval for “Bitcoin ETFs for listing on all registered national securities exchanges”. The market reacted to the tweet, with Bitcoin quickly trading up to $47K on the news (+1.1%). However, within 15 minutes, SEC Chair Gary Gensler tweeted that the SEC’s X/Twitter account had been compromised and no approval had occurred causing BTC to trade back to ~$45k. The internet had fun piecing together what actually occurred with some speculating that the tweet was in the SEC’s draft folder prompting an exploiter to publish it. While the market is collectively holding its breath on the ETF approval, many signs (such as a press release from CBOE today) indicate we should have approval today (in about the next hour).

DISCLAIMER: This commentary is not intended to be investment advice, investment research, or a recommendation. Please consult your investment professional for your own circumstances."

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Disclaimer: This commentary is provided as general information only and is in no way intended as investment advice, investment research, legal advice, tax advice, a research report, or a recommendation. Any decision to invest or take any other action with respect to any investments discussed in this commentary may involve risks not discussed, and therefore, such decisions should not be based solely on the information contained in this document. Please consult your own financial/legal/tax professional.

Statements in this communication may include forward-looking information and/or may be based on various assumptions. The forward-looking statements and other views or opinions expressed are those of the author, and are made as of the date of this publication. Actual future results or occurrences may differ significantly from those anticipated and there is no guarantee that any particular outcome will come to pass. The statements made herein are subject to change at any time. Arca disclaims any obligation to update or revise any statements or views expressed herein. Past performance is not a guarantee of future results and there can be no assurance that any future results will be realized. Some or all of the information provided herein may be or be based on statements of opinion. In addition, certain information provided herein may be based on third-party sources, which is believed to be accurate, but has not been independently verified. Arca and/or certain of its affiliates and/or clients may now, or in the future, hold a financial interest in investments that are the same as or substantially similar to the investments discussed in this commentary. No claims are made as to the profitability of such financial interests, now, in the past or in the future and Arca and/or its clients may sell such financial interests at any time. The information provided herein is not intended to be, nor should it be construed as an offer to sell or a solicitation of any offer to buy any securities, or a solicitation to provide investment advisory services.

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