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Crypto prices remain subdued this week, only to see a spike on Wednesday, with Bitcoin trading at $26,770 at the time of writing. Meanwhile, Ether has risen above $1,600, and the total crypto market cap is back at $1.11 trillion.
This comes as the US 10-year Treasury yield moved to 4.509%, marking a significant change in investor sentiment. Following this trend, on Tuesday, the yield experienced a further surge to 4.55%, up from 4.18% at the beginning of the month and reaching its highest level in about 16 years. This sharp upward move in rates has been affecting not just crypto markets but the equity markets as well, with the S&P 500 at a level not seen since early June and the Nasdaq having its weakest reading in nearly four months.
“I am not sure if the world is prepared for 7%,” said JPMorgan Chase CEO Jamie Dimon on Tuesday, while noting that the rise in the US Federal Reserve's benchmark fed funds rate from 0%-2% was not a big deal, but the subsequent increase to the current 5.25%-5.50% caught some off guard. A rise to 7%, meanwhile, is expected by very few market participants, and it would mean “stress in the system,” possibly sending the US economy into recession, he added.
JPMorgan's UK bank meanwhile banned crypto-linked payments via debit card or by outgoing bank transfer starting Oct. 16, according to an email to customers. “If we think you're making a payment related to crypto assets, we'll decline it,” the email said, adding that customers are free to use a different bank or provider to invest in crypto. According to Chase, it was banning crypto payments because of increasing crypto scams targeting UK customers.
This comes after the local financial watchdog, the Financial Conduct Authority (FCA), recently said it had facilitated discussions between banks and crypto firms because lenders have shown a reluctance to offer services to the industry.
This is another setback for the crypto market, which is already facing increased regulatory scrutiny after the collapse of FTX and Terra in 2022 while prices are making attempts at recovery. Increasing rates are not doing the risk assets any favor in addition to rising US Treasury yields, stagflation risks, and a strengthening dollar index.
Now, there's also the lingering threat of a US government shutdown, with the House of Representatives not looking close to a deal on keeping the federal government running in the short term. This can also have an impact on crypto, as during the last shutdown in 2018 and 2019, companies like Bakkt saw their approvals pushed weeks behind. Also, a Bitcoin ETF application was withdrawn, blaming the shutdown.
We're already seeing the SEC delay spot-based bitcoin exchange-traded funds (ETFs) applications. So, a shutdown might mean the efforts to list spot Bitcoin ETFs have to wait longer for the US Securities and Exchange Commission (SEC) to make a decision on their applications.
Already this week, well before even the interim deadlines arrived, the Commission extended its next deadlines for two Bitcoin ETF applications from Global X and Ark 21Shares. This puts the formal deadline for an SEC response now at Jan. 10 for Ark Investment Management and 21Shares, which have been seeking ETF approval since 2021, and Nov. 21 for Global X, which only filed its application last month.
The same day, in a letter to SEC Chairman Gary Gensler, a bipartisan group of members of the House Financial Services Committee called for approvals of the pending spot Bitcoin ETF applications “immediately” after the agency's court loss against Grayscale. Gensler is set to appear in an oversight hearing in that committee on Wednesday.
A spot-based ETF is a big deal for crypto, as noted by broker Bernstein in its research report this week, where it said that the crypto fund management business could have assets of as much as $650 billion within five years as the expected launch of Spot Bitcoin ETF in the US is expected to bring more capital to the market. The current “cottage industry” has about $50 billion of assets under management (AUM), about 4% of the present size of the crypto market, wrote analysts led by Gautam Chhugani.
A few months ago, several institutions, including the asset management giant BlackRock, filed for a spot Bitcoin ETF with the securities regulator. Earlier this month, the agency delayed making a decision on all of these applications until October.
As per the note, Bernstein expects demand to be driven by “investment advisors, wealth and private banking integrated products and easier access to ETFs in direct broker accounts,” implying a 10% ETF share for Bitcoin and Ethereum market cap as well as a 5-6% share for crypto hedge funds. “Crypto financial adoption follows hype cycles, and we expect a hockey stick adoption, with 2024 as the landmark regulatory year for approval of ETFs,” the report added.
WLD Price on an Uptrend Lately
While expectations for a spot Bitcoin ETF have traders and investors focused on the leading cryptocurrency, Ether has been experiencing dwindling revenue and renewed inflationary tokenomics. However, a prominent upgrade is coming later this year, which will introduce “proto-danksharding” to the blockchain to reduce gas fees and increase transactions.
Among altcoins, Maker, Tron, and Bitcoin Cash have been performing well. WLD token has also been recording greens for the last two weeks now. The token's price jumped 72.3% during this period and after WLD hit its all-time low at $0.97310, as per Coingecko.
With a market cap of about $229 million, WLD currently sits at the 131st place in the crypto market. As of writing, WLD has been trading at $1.74, up 3.8% in the past 24 hours, while managing $70.5 million in trading volume. Despite this uptick, there are fluctuations in its trading activity.
The token's volume has dropped 32.5% from a day ago. WLD's price performance in the past week has been positive by 21% and 43% in the past month. The token, however, is down 47% from its $3.30 peak just two months ago when it was launched.
WLD is the native token of Worldcoin, a digital identification platform. During its beta program, WLD was distributed to participating users. There are a total of 10 billion WLD tokens, which will be issued over a span of 15 years. Currently, a mere 131 million WLD tokens are circulating in the market. One hundred million of these tokens were provided to market makers to facilitate trading activities at its launch.
When it comes to Worldcoin, the platform is developed by Tools for Humanity and co-founded by ChatGPT parent firm OpenAI creator Sam Altman. The San Francisco, US-based company aims to give real humans a ‘global identity of personhood' to verify their human identity and differentiate themselves from bots and AI algorithms.
Worldcoin's ecosystem involves a World ID and a World App. World ID allows users to verify their human identity online by using an iris-scanning device called the Orb, through which a user scans a person's iris. The orb generates a special identification code, known as an IrisCode, and then a unique World ID is issued to the user, which is added to the Worldcoin blockchain.
During its launch week, Worldcoin Orbs were available in Tokyo, Singapore, Hong Kong, Seoul, Paris, Lisbon, and many other cities globally. However, Worldcoin's services are currently unavailable in the US and other restricted regions.
Users can obtain a World ID via the Worldcoin App, which ran on the Polygon blockchain in the beta phase but later migrated to Optimism as part of Optimism's Superchain.
Last week, Worldcoin announced that it was relieving Optimism of a ton of workload due to a WorldApp wallet upgrade, making it scalable and cost-efficient without necessarily requiring Worldcoin's input. This new update allowed it to cut down its fee expenditures and reduce Optimism's load by two-thirds. Before the update, Worldcoin's transaction costs were shared between Ethereum (90%) and Optimism (10%).
Following this new development, WorldApp registered its highest single-day transaction volume and development activity, which measures the public GitHub repositories attached to a project, also rose from 1.19 to 1.85.
Worldcoin Usage Grows, but so does Scrutiny
WLD's latest price action came as the biometric wallet and ID project reported this week that since its launch, the platform has signed up more than 1% of the population of Chile, which stands at around 19.5 million.
According to the crypto project, more than 200,000 Chileans are now using Worldcoin in order to receive free WLD tokens. This popularity uptick in Chile is shared by other South American countries, including Argentina, where they reported last month that over 9,500 Argentines have been getting their IDs verified in a day while having only four verification stations in the country.
Worldcoin has been seeing a lot of traction in South American countries, and as a result, Tools For Humanity ramped up operations in Chile, setting up more verification stations in Vina del Mar and Concepcion in addition to Santiago, the capital.
As the project went live in July this year, people have been signing up with World ID as they receive “free” WLD coins. According to the official website, over 2.3 million people have had their eyeballs scanned so far.
Data from a Kenyan parliamentary committee tasked with investigating the project revealed that 350,000 Kenyans had registered in July, accounting for 25% of the users on the platform at that time. However, the project is facing obstruction in the African country, with the government suspending Worldcoin activities in August as it assesses potential risks to public safety. The Communications Authority of Kenya and the Office of the Data Protection Commissioner said that a preliminary review raised concerns such as obtaining consumer consent in exchange for a monetary award (i.e., WLD coins) bordered on inducement.
The Kenyan law enforcement officers raided the Worldcoin office and seized their records and machines, which were taken to Kenya's Directorate of Criminal Investigations headquarters for due analysis. Tools for Humanity has been accused of not disclosing its true intentions when it registered in Kenya.
The Kenyan government has also attempted to arrest Alex Blania, CEO and co-founder of Tools For Humanity, and Thomas Scott, the legal spokesperson for Tools for Humanity, after appearing before the Kenyan National Assembly during a hearing only to be intervened by US authorities.
Besides Kenya, Argentina, France, Nigeria, the UK, and Germany have also taken various regulatory steps as concerns have been raised over the lack of transparency regarding the collection of biometric data, how it will be utilized, and who will be granted access to it.
In recent weeks, France's data watchdog has carried out “checks” at the company's Paris office after it said in July that it was investigating Worldcoin due to the legality of its biometric data being “questionable.”
In Argentina, the data regulator AAIP started investigating Worldcoin over its collection, storage, and use of personal data. In a letter last month, the AAIP asked Worldcoin about the project and the “legal basis for the processing of personal data.”
Germany's data watchdog has also been investigating the project since late last year due to concerns over its large-scale processing of sensitive biometric data. Financial regulator BaFin is another agency investigating digital currency.
Meanwhile, in Britain, the data regulator said in July that it would be examining Worldcoin. Portugal's data regulator, the CNPD, has inspected the local data collection operation of Worldcoin and has been in contact with the Bavarian data protection authority in Germany.
In response, the Worldcoin Foundation, a Cayman Islands-based entity, said in an interview that it is designed to protect individual privacy and is committed to meeting regulatory requirements. “The team at Worldcoin welcomes any opportunity to address questions regarding the project's purpose and technology,” it said at the time.
Given Worldcoin's growing usage globally, its token stands to benefit from this adoption. However, the regulatory scrutiny surrounding Worldcoin can't be ignored either. So, it remains to be seen just how Worldcoin will handle the concerns and how that'll affect the trajectory of its adoption. But for now, the crypto market remains focused on Spot Bitcoin ETF, whose eventual launch is expected to unlock the floodgates to institutional money.
Gaurav started trading cryptocurrencies in 2017 and has fallen in love with the crypto space ever since. His interest in everything crypto turned him into a writer specializing in cryptocurrencies and blockchain. Soon he found himself working with crypto companies and media outlets. He is also a big-time Batman fan.