What's Driving Token Prices? March 27, 2024

Katie Talati
Mar 27, 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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  • KCS (-20%) - Yesterday, the Southern District of New York charged the two founders of the crypto exchange, Kucoin, with violating the Bank Secrecy Act. The exchange is charged with lying to federal investigators about serving U..S customers. It is also accused of not instituting an Anti-Money Laundering (AML) program until 2023 and receiving millions of dollars from Tornado Cash. This is another crackdown by U.S. law enforcement on crypto exchanges, with similar charges levied against Binance last year. Since the news broke yesterday, $600m have flowed out from the exchange.
  • FTM (-2.8%) - Layer-1 blockchain, Fantom, announced the launch of its new technology, Sonic, which promises to speed up and process blockchain transactions at far greater speeds than are currently available. Fantom has experienced a lot of turmoil over the past couple of years, from the hack of its main bridge Multichain, to its founder, Andre Conje, quitting the project. The new upgrade and functionality promised by Sonic could potentially create relevancy for Fantom once again. 
  • FXS (+5.8%) - DeFi project, Frax, released a governance proposal last week detailing revenue generation strategies for Frax. It proposes distributing 50% of the revenue to stakers of FXS (Frax’s governance token) and the other 50% to buy back FXS and add liquidity to Frax assets in the open market. Frax previously used a mix of stablecoins and FXS to back the FRAX stablecoin, however, following the collapse of LUNA and UST in 2022, the team pivoted to a fully-backed stablecoin. Therefore, any revenue generated was redirected from token holders to create full backing for the stablecoin. This week, the collateralization ratio reached 100%, which means the FRAX stablecoin is now backed 1:1 with redeemable assets, allowing the team to return to focus on revenue generation. The proposal is currently up for a vote and ends on Saturday.
  • BADGER/LDO (+56%/+17%) - DeFi projects, Lido and BadgerDAO, launched a new product that allows users to take out feeless Bitcoin loans and earn rewards, called eBTC. Users can take out a loan backed with ETH or stETH, Lido’s liquid staking derivative. The deposited assets are then staked in Lido’s protocol to earn ETH staking rewards, which are passed on to the end user. eBTC also does not charge the typical fees of other DeFi lend/borrow projects, such as initiation fees, repayment charges, and interest, and it is designed to be fully transparent and non-custodial.

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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