Fidelity suggests that an anticipated interest rate cut by the U.S. Federal Reserve in 2024 could spark renewed interest from major institutions in decentralized finance (DeFi) and stablecoins, provided that the infrastructure supporting these digital assets further develops. While Fidelity initially expected institutions to explore DeFi for its yields in 2023, this did not materialize due to Federal Reserve rate hikes, which prompted a shift toward traditional fixed-income products perceived as safer. In the risk-averse climate, institutions found the mid-single-digit returns offered by DeFi to be insufficient relative to the associated risks of smart contracts. Fidelity anticipates a potential resurgence of institutional interest in DeFi yields in 2024 if they become more attractive than traditional finance yields, coupled with advancements in infrastructure.
Furthermore, Fidelity highlights the potential for corporations to become more comfortable incorporating digital assets into their balance sheets, particularly following updated rules from the U.S. Financial Accounting Standards Board. The report also predicts a significant catalyst for stablecoin adoption in 2024, driven by institutional exploration of U.S. dollar-pegged assets. TradFi firms considering the use of stablecoins for settlements could bring legitimacy to these digital assets, with Fidelity identifying payments, remittances, and international trade as sectors poised for increased stablecoin adoption. The report anticipates clearer regulatory frameworks, providing more certainty, and expresses confidence that stablecoins like Tether (USDT) and USD Coin (USDC) will maintain their positions in 2024, especially if anticipated Federal Reserve interest rate cuts occur.
Celsius, facing financial challenges, has initiated the transfer of over $125 million worth of Ether (ETH) to various centralized exchanges in a move to address creditor repayments. Between January 8 and 12, sizable amounts, $95.5 million to Coinbase and $29.7 million to FalconX, were shifted. Despite these transfers, Celsius still retains more than 550,000 ETH, valued at $1.36 billion. In a strategic move, on January 5, Celsius unstaked 206,300 ETH, worth $407 million at the time, asserting that the liberated assets would be utilized for restructuring expenses and preparing to fulfil creditor obligations. Although Celsius has outlined plans to distribute Bitcoin and ETH to creditors as part of its recovery strategy, a specific date for the disbursement remains undisclosed, leaving creditors in anticipation after an 18-month wait since the platform declared bankruptcy in July 2022.
Meanwhile, FTX and its trading arm, Alameda Research, recently made significant crypto transfers to exchanges. On January 14, the bankrupt FTX and Alameda Research moved $28 million, comprising $18.7 million in Wrapped Bitcoin, $8 million in Ether, and $1 million in Pendle (PENDLE), to Coinbase and Binance. FTX, which declared bankruptcy in November, has been actively working to raise funds for creditor repayment. With approximately $7 billion in reclaimed assets, including $3.4 billion in cryptocurrency, FTX has garnered support from the market, with creditor claims reaching as high as $0.50 on the dollar in October. While a specific reimbursement date is not confirmed, the current estimate suggests that FTX customers could expect repayments to commence sometime this year.
In the realm of Bitcoin exchange-traded funds (ETFs), BlackRock has opted for a more understated marketing strategy, departing from the flashy approach adopted by other issuers. The investment giant recently unveiled its inaugural video ad for the iShares Bitcoin Trust ETF (IBIT), featuring a nearly two-minute presentation by a BlackRock executive emphasizing Bitcoin's value proposition and the ease with which investors can access the new ETF. Notably, the ad eschews crypto jargon and flamboyant imagery, adopting a mature and straightforward tone. Commentators have observed that this approach could be tailored to appeal to the wealthy boomer market, with Bloomberg ETF analyst Eric Balchunas noting that the ad exudes a calm disposition and a reassuring sense of, "it's ok now, the adults are here."
While some may find BlackRock's campaign "boring," others laud its brilliance, considering it an effective strategy to resonate with older generations. Chris Dark, the founder of Fourth Turning Investments, deems the ad "so boring it's brilliant," suggesting its success in capturing the attention and trust of boomers. Digital asset investor Fred Krueger adds that the ad's subdued approach is more palatable for wealthy boomers who may be less receptive to radical financial system overhauls advocated by younger generations. This calculated strategy is perceived as a Wall Street takeover of the Bitcoin narrative, with the expectation that BlackRock's reputation and reliability will attract older investors to embrace Bitcoin through traditional finance channels.