11.17 AI Daily Report Crypto Assets Market Turbulence Regulatory Attitudes Influence Industry Development

1. Headline

1. Huawei releases groundbreaking AI computing power utilization technology, expected to solve industry pain points.

Huawei held a new product launch conference at its headquarters, officially announcing a groundbreaking AI computing power utilization technology. This technology achieves unified management and efficient utilization of heterogeneous computing power such as NVIDIA and Ascend through software innovation, significantly increasing the utilization rate of computing resources like GPUs and NPUs from the industry average of 30%-40% to over 70%, thereby significantly unlocking the potential of computing hardware.

Insiders say that the utilization rate of computing power resources has always been a pain point restricting AI development. Currently, AI training and inference typically require a large amount of computing power resources, but due to low computing power utilization efficiency, a significant amount of computing power remains idle and wasted. Huawei's groundbreaking technology is expected to fundamentally solve this industry problem and promote the overall improvement of AI computing power utilization efficiency.

Analysts point out that the demand for AI computing power is rapidly increasing, but the computing resources are relatively limited and expensive. Improving the efficiency of computing power utilization will significantly lower the cost threshold for AI applications, facilitating the implementation of AI technology in more fields. At the same time, the efficient use of computing power will also reduce the energy consumption and carbon emissions of data centers, contributing to the realization of green and sustainable development.

In the future, Huawei is expected to promote this technology to more scenarios, further unleashing computing power potential and assisting the rapid development of the AI industry. At the same time, other manufacturers will also accelerate the introduction of similar technologies to enhance their competitiveness in the AI field.

2. The U.S. Department of Justice cracks down on North Korean cybercrime groups, seizing $15 million worth of cryptocurrency.

The U.S. Department of Justice recently announced the dismantling of an illegal operation by a North Korean cybercrime group, seizing approximately $15 million worth of cryptocurrency. This is another significant action by the U.S. government to combat North Korean cybercrime.

It is understood that this North Korean hacking group has carried out multiple cyber attacks and financial frauds worldwide using phishing and other means, stealing a large amount of cryptocurrency and traditional financial assets. They have also lured foreigners into providing funding support for the North Korean regime through a fake employment program.

The U.S. Department of Justice stated that this operation aims to cut off the funding sources of North Korean cybercrime groups and combat their illegal activities. The seized cryptocurrencies will be confiscated to compensate the victims. Meanwhile, five individuals who assisted North Korea have also been convicted.

Analysts point out that this action once again highlights North Korea's practice of using cybercrime to obtain illegal profits. Due to strict international sanctions, North Korea has adopted cybercrime as an important means of financing, posing a serious threat to global cybersecurity.

In addition, cryptocurrencies are easily exploited by criminals due to their anonymity and cross-border circulation characteristics. Combating cybercrime requires strengthening regulation, while also increasing public risk awareness to jointly maintain cybersecurity.

3. Bitcoin ETF's performance in the first month is unsatisfactory, and institutional investors are in a state of observation.

A month after the launch of the Bitcoin futures ETF, its performance has fallen far short of expectations, raising widespread doubts about institutional investors' attitudes in the market. Data shows that since its launch, the Bitcoin futures ETF has seen a cumulative net outflow of over $1.2 billion.

Analysts say that institutional investors are not very enthusiastic about Bitcoin ETFs, mainly due to the high volatility of the cryptocurrency market and regulatory uncertainty. Compared to traditional assets, cryptocurrencies have a higher risk premium, and the return on investment is also more uncertain.

In addition, the launch of the Bitcoin futures ETF did not bring the expected influx of funds; instead, it triggered some investors to take profits. Compared to spot ETFs, futures ETFs also have certain flaws in terms of structure and costs.

However, some analysts hold an optimistic view on the long-term prospects of Bitcoin ETFs. They believe that the launch of ETF products will help attract more institutional funds into the cryptocurrency market, thereby increasing the market's maturity and liquidity.

Overall, institutional investors remain cautious about investing in cryptocurrencies. Only under increasingly clear regulations and controllable risks may institutional funds flow in on a large scale. The future performance of Bitcoin ETFs will further test the confidence of institutional investors.

4. XRP ecosystem shows divergence again, Ripple has a funds dispute with some exchanges.

Recently, internal disputes have arisen within the XRP ecosystem, with Ripple and some cryptocurrency exchanges having disagreements and disputes over the ownership and disposal rights of the XRP token.

According to reports, Ripple has sued several exchanges for unauthorized use of its XRP tokens and is requesting the exchanges to freeze and return the relevant funds. The exchanges, on the other hand, argue that the XRP they hold was deposited by users themselves and that there was no infringement on Ripple's rights.

Analysts point out that this dispute reflects the issues of power distribution and利益分配 within the XRP ecosystem. Due to the lack of clear rules, different parties have disagreements regarding the ownership of XRP tokens, leading to this controversy.

In addition, the internal split within the XRP ecosystem reflects the disorderly state of the cryptocurrency field. Compared to the traditional financial system, the cryptocurrency ecosystem lacks unified rules and regulation, which easily breeds internal friction and disputes.

How to achieve orderly development while protecting the rights of innovators and maintaining fair competition is a major challenge facing the cryptocurrency ecosystem. Analysts are calling for the urgent establishment of unified rules and standards in the cryptocurrency field, clarifying the responsibilities and rights of all parties, and resolving internal conflicts.

5. Competition among cryptocurrency exchanges intensifies, and the fee war may reignite.

Recently, multiple cryptocurrency exchanges have successively adjusted their trading fee policies, leading to an imminent trading fee war. Industry analysts expect that in order to attract more traders and liquidity, the competition for fees among major exchanges will further intensify in the future.

It is understood that the fee levels of mainstream exchanges range from 0.01% to 0.08%. Among them, Exchange A has the lowest fee rate at -0.0038%, while Exchange B has the highest fee rate at 0.08%.

Analysts say that fee income is one of the main sources of revenue for exchanges. In the context of increasing industry competition, exchanges can attract more trading volume and expand their market share by lowering fees.

However, excessively lowering transaction fees may also have some negative effects. On one hand, the profitability of the exchange will be squeezed; on the other hand, low fees may attract more institutional and algorithmic traders, thereby increasing market volatility.

In addition, the fee wars may exacerbate disorderly competition in the industry and even lead to a vicious cycle. Analysts urge exchanges to weigh their own interests against the healthy development of the industry when setting fee prices to avoid excessive competition.

At the same time, improving the service quality and innovation capability of the exchange is also an important way to cope with the fee war. Only by providing better products and services to users can we truly win their favor.

2. Industry News

1. Bitcoin has fallen below the $94,000 mark, and panic has emerged again in the crypto market.

The price of Bitcoin fell below the key support level of $94,000 on November 17, dipping to as low as $93,005. Data shows that Bitcoin dropped 1.43% in the past 24 hours, Ethereum fell 2.43%, and the total market capitalization of cryptocurrencies evaporated by 2%, reporting at $3.268 trillion.

Market analysts point out that Bitcoin's recent decline is mainly influenced by the macroeconomic environment. After the temporary relief of the U.S. government shutdown, a large amount of delayed economic data will be re-released, coupled with hawkish comments from Federal Reserve officials, raising market concerns about inflation prospects. Meanwhile, the volatility in the technology sector's momentum stocks has also intensified, adding to investors' risk aversion.

Investor sentiment remains low, with Alternative data showing that the cryptocurrency Fear and Greed Index for the day is only 14, which falls under the “extreme fear” level. Trader Eugene stated that if Bitcoin drops below $93,000, it will test deeper liquidity ranges.

However, some analysts believe that the current selling pressure mainly comes from long-term holders taking profits, rather than panic selling. As long as the $93,000 level is not broken, Bitcoin is still expected to build a rebound in the bottom range. However, if major buyers continue to withdraw, the crypto market may face greater liquidity pressure.

2. Ethereum is precariously holding the $3000 threshold, with institutional funds continuously flowing out, causing downward pressure.

The price of Ethereum dipped to $3004 on November 17, just a step away from the key support level of $3000. Data shows that Ethereum has dropped 2.43% in the past 24 hours, with BlackRock liquidating a single position of $173.3 million in ETH.

Analysts point out that institutional rebalancing has intensified market concerns about the short-term trend of Ethereum. After experiencing capital outflows for three consecutive weeks, Ethereum ETFs saw a net outflow of $1.11 billion last week, indicating that institutional investors are gradually withdrawing their positions.

At the same time, bearish sentiment in the options market is also rising. Data shows that the proportion of open contracts for Ethereum put options continues to increase, and implied volatility has also risen, reflecting the market's concerns about downside risks.

However, some analysts are optimistic about Ethereum's future. Well-known trader Eugene believes that if Ethereum can stabilize around the $3000 mark in the short term and gain support from positive fundamentals, there is still a chance to establish an independent market trend in the coming weeks.

In general, whether Ethereum can hold the key support level of $3000 will determine its future trend. The flow of institutional funds and the sentiment in the options market may become dominant factors. Investors need to closely monitor changes in the fundamentals and technical aspects.

3. Altcoins strengthen against the market trend, Solana ecosystem attracts funding.

Against the backdrop of the decline in mainstream cryptocurrencies such as Bitcoin and Ethereum, some altcoins have shown an upward trend contrary to the market. Data shows that tokens in the Solana ecosystem received $46.34 million in inflows over the past week, becoming the new favorite in market funds.

Analysts believe that the rise of Solana ecosystem tokens is mainly driven by two factors. On one hand, the rapid development and continuous expansion of the Solana ecosystem have attracted more investor attention. On the other hand, there has been a shift in investors' preference for alternative assets, seeking higher returns during the bear market.

At the same time, privacy coins like ZEC have also recently seen a price increase, attracting market attention to the privacy sector. The well-known venture capital firm Andreessen Horowitz(a16z) emphasized on social media that as cryptocurrencies reach more mainstream investors, the demand for privacy is more urgent than ever.

However, some analysts are cautious about the rise of altcoins. They believe that without practical application scenarios, the upward trend of altcoins is difficult to sustain, and investors need to remain rational and manage risks effectively.

Overall, in the context of a sluggish cryptocurrency market, the counter-trend rise of certain altcoins has attracted market attention. However, while investors chase potential returns, they also need to maintain sufficient awareness of the risks.

3. Project Highlights

1. Sui ecosystem accelerates expansion, Move-based projects lead a new wave of innovation.

Sui is a brand new blockchain ecosystem created by former Meta employees, aimed at addressing the scalability and user experience challenges currently faced by the blockchain. Sui uses the Move programming language to provide high-performance, low-cost on-chain computing capabilities.

Recently, the Sui ecosystem has been continuously expanding, with multiple new projects launching one after another. Among them, Cetus is the first DeFi protocol in the Sui ecosystem, supporting lending, liquidity mining, and other functions; Ares is an NFT marketplace that supports NFT creation, trading, and more. In addition, Sui has launched the SuiPlay gaming platform, attracting many game projects to settle in.

The rapid development of the Sui ecosystem has attracted widespread attention in the industry. Analysts believe that the high-performance characteristics of the Move language are expected to drive innovation in areas such as DeFi and NFTs, making the Sui ecosystem a key battleground for the next generation of blockchain applications. At the same time, other Move-based projects, such as Aptos and Movement, are also actively positioning themselves, and the Move ecosystem is expected to lead a new wave of innovation.

2. Hyperliquid launches the native yield layer Hyperbeat, building a new paradigm for DeFi.

Hyperliquid is a decentralized liquidity network designed to provide efficient liquidity for various assets. Recently, Hyperliquid announced the launch of its native yield layer, Hyperbeat, which will inject new momentum into the ecosystem.

Hyperbeat is a yield layer based on the Hyperliquid protocol, allowing users to earn rewards by providing liquidity. Unlike traditional market-making models, Hyperbeat employs algorithmic market-making strategies that automatically adjust asset ratios to ensure efficient liquidity. In addition, Hyperbeat will integrate various applications within the Hyperliquid ecosystem to provide users with a one-stop DeFi experience.

Analysts believe that the launch of Hyperbeat marks a deepening development of the Hyperliquid ecosystem, with the potential to build a new paradigm for DeFi. Through algorithmic market making and application integration, Hyperbeat can significantly enhance asset liquidity and user experience, bringing new growth momentum to DeFi. At the same time, Hyperbeat will also accelerate the application scenarios of the Hyperliquid ecosystem token HYL, injecting new value into the token.

3. Seismic raised $17 million in funding, and privacy computing has become a hot topic in cryptocurrency.

Seismic is a blockchain project focused on privacy computing, recently completing a $10 million financing round, bringing the total amount raised to $17 million. This round of financing was led by the well-known venture capital firm Andreessen Horowitz(a16z).

Seismic is based on trusted execution environment ( TEE ) technology, providing privacy protection for DeFi applications. Users can conduct encrypted transactions, lending, and other operations on Seismic without disclosing personal information and asset details. In addition, Seismic has launched the native execution client Seismic Reth, which supports seamless integration with the Ethereum ecosystem.

Privacy computing is seen as a key direction for the development of blockchain. Analysts say that Seismic brings a new privacy protection solution for DeFi, which is expected to promote the compliant development of the industry. As regulations become increasingly strict, privacy computing is likely to become the next crypto hotspot. At the same time, the technical strength and business potential of the Seismic team have also attracted capital's favor.

4. The Uniswap fee reform has attracted attention, and the token UNI is on the rise.

Uniswap is the largest decentralized exchange in the Ethereum ecosystem and has recently announced significant reforms to its fee mechanism. Under the new mechanism, Uniswap will allocate 60% of the fees to UNI token holders instead of the project team.

This move aims to further decentralize Uniswap, allowing token holders to gain more benefits. Analysts believe that the fee reform will promote the UNI token to gain more practical application scenarios, which is expected to boost the token's price. In fact, since the reform plan was announced, the price of the UNI token has already seen a significant increase.

Multiple institutions are optimistic about the long-term prospects of the UNI token. Well-known trader Eugene has stated that if major cryptocurrencies stabilize in the short term, UNI is expected to outperform the market. Overall, Uniswap's decentralized reform has received positive feedback from the market and is expected to further enhance its influence in the DeFi space.

4. Economic Dynamics

1. The Japanese economy contracted for the first time in six quarters, increasing deflationary pressures.

Preliminary data released by the Japanese government on Monday showed that Japan's real GDP contracted by 0.4% quarter-on-quarter in the third quarter, and by an annualized rate of 1.8%. This marks the first contraction since the first quarter of 2024. The economic weakness is largely attributed to a decline in external demand and a significant reduction in housing investment.

Economists say that although this decline may be due to temporary factors related to regulatory changes, the data still highlights the challenges facing the Japanese economy. Factors such as increased deflationary pressure, an aging population, and weak global demand are dragging down Japan's economic recovery.

The Governor of the Bank of Japan, Kazuo Ueda, reiterated in his latest comments that the central bank will maintain an accommodative monetary policy stance. However, analysts point out that against the backdrop of persistently low inflation rates, the effectiveness of the central bank's accommodative policy may further diminish.

Goldman Sachs economist Cornell stated: “The Japanese economy is facing multiple downward risks, and the government and central bank need to implement stronger stimulus measures to boost the economy.” He expects that the Bank of Japan will initiate a new round of quantitative easing in the first half of next year.

2. The Fed's hawkish signals trigger a global sell-off, as the market faces fundamental pressures again.

Last week, several officials from the Federal Reserve sent hawkish signals, significantly cooling market expectations for a rate cut in December. With the temporary resolution of the U.S. government shutdown, a large amount of postponed economic data will be released this week, and the market will once again face fundamental pressures.

The U.S. Department of Labor will release the delayed September employment report on Thursday. Analysts expect the data to show that the job market remains strong, further intensifying market expectations that the Federal Reserve may hold steady in December.

Goldman Sachs analyst Preston stated: “Given that inflation rates remain high and the job market continues to tighten, the Federal Reserve is likely to raise interest rates by another 50 basis points at the December meeting.” He expects the Federal Reserve to end its rate hike cycle in the first quarter of next year.

At the same time, U.S. Treasury Secretary Mnuchin hinted that the $2,000 dividend promised by Trump could be delivered in the form of tax cuts or tips exempt from taxes. This move aims to boost consumer confidence but may also further increase inflationary pressures.

Under the dual impact of hawkish expectations and fiscal stimulus, the momentum sector of the US stock market experienced increased volatility last week, and risk assets like Bitcoin also faced selling pressure. Analysts warn that if the fundamental data deteriorates further, market volatility may intensify.

3. Malaysia relaxes cryptocurrency regulations to attract digital asset companies.

The Malaysian Securities Commission recently released a discussion draft of the “Digital Asset Guidelines,” proposing to relax regulatory requirements for cryptocurrency exchanges and allowing more tokens to be listed for trading on local exchanges.

According to the new framework, exchanges are required to assess the compliance of tokens and adhere to higher governance, security, and transparency requirements to ensure investor protection. This reform is expected to shorten the token listing time, increase the variety of assets available to investors, and promote Malaysia as a digital asset hub in Southeast Asia.

Financial technology expert Su Haili believes that this initiative will attract more cryptocurrency companies and capital to flow into Malaysia. He stated: “Malaysia is creating a favorable environment for the digital asset ecosystem, which will promote the development of the local fintech industry and inject new vitality into the economy.”

However, some analysts have expressed concerns about this. Deloitte analyst Wang Xiaoming pointed out that regulatory relaxation could lead to more speculation and manipulation, increasing risks for investors. He urged the government to strengthen risk management while promoting innovation.

Overall, Malaysia's regulatory adjustments aim to balance innovation and risk, attract digital asset companies to settle, and promote the development of the local fintech industry. However, the specific effects remain to be seen over time.

4. The European Central Bank may be forced to adjust its monetary policy due to the expansion of stablecoins.

European Central Bank President Christine Lagarde recently warned that the rapid expansion of stablecoins could have systemic effects on the European financial ecosystem, forcing central banks to adjust monetary policy in response.

Stablecoins are cryptocurrencies that are pegged to sovereign currencies such as the US dollar, and have developed rapidly in recent years. Dutch Central Bank President Klaas Knot has stated that if these tokens experience turbulence, it could affect financial stability, the overall economy, and even inflation.

The European Central Bank has always viewed stablecoins as a regulatory issue, but the comments from Slopin indicate that the central bank is beginning to see them as a potential source of macroeconomic shocks. He believes that if the shock is strong enough, the European Central Bank may be forced to “reconsider monetary policy,” but it is still unclear whether this would require an interest rate hike or cut.

Goldman Sachs analyst Castro stated: “The expansion of stablecoins may indeed weaken the transmission efficiency of central bank monetary policy, but the current impact is still limited. If systemic risks arise in the future, central banks may have to take action in response.”

At the same time, some experts have raised concerns about the privacy of stablecoins. A report from Aleo warns that a lack of privacy could expose organizations to competitors and malicious actors. The company calls for enhanced privacy protection for stablecoin transactions.

Overall, the development of stablecoins has posed new challenges for central banks. How central banks will respond in the future and how stablecoin regulation will evolve are both worthy of ongoing attention.

5. Regulation & Policy

1. The Japanese Financial Services Agency plans to define cryptocurrencies as financial products and reduce tax rates.

Japan's Financial Services Agency is considering new regulations that will define cryptocurrencies as financial products subject to insider trading rules. This move aims to strengthen the oversight of cryptocurrency trading.

Policy Background: Japan is one of the most active countries in the global cryptocurrency trading market. To regulate market order and protect investors' rights, it is necessary for the Financial Services Agency to introduce relevant regulatory measures. The newly proposed regulations will classify cryptocurrencies as financial products, which will help strengthen regulation and maintain market fairness.

Policy content: The new regulations will apply to the 105 types of cryptocurrencies currently in circulation in Japan, including Bitcoin and Ethereum. Exchange service providers must disclose information such as price volatility risks. Banks and insurance companies will be allowed to sell cryptocurrencies to depositors and policyholders through their securities subsidiaries. In addition, profits from cryptocurrency trading will be subject to a 20% tax rate, which is on par with the stock trading tax rate and significantly lower than the current maximum tax rate of 55%. The Financial Services Agency hopes to pass the related legislation during next year's ordinary Diet session.

Market reaction: Industry insiders generally believe that incorporating cryptocurrencies into the regulatory framework for financial products will benefit the long-term healthy development of the industry. The reduction in tax rates will also attract more investors to participate. However, some are concerned that excessive regulation may stifle innovation. Overall, the market holds a cautiously optimistic attitude towards this policy.

Expert Opinion: The president of the Japan Virtual Currency Exchange Association stated, “Defining cryptocurrencies as financial products is a reasonable move that helps enhance regulatory transparency and market confidence.” However, some experts also remind that “regulation should not be overly rigid and must maintain a certain level of flexibility to adapt to the rapidly developing cryptocurrency market.”

2. European Central Bank officials warn that a stablecoin run could impact interest rate decisions

European Central Bank policymaker Olaf Slepen warned that a run on stablecoins could force the European Central Bank to reconsider its interest rate policy.

Policy Background: In recent years, stablecoins pegged to the US dollar have rapidly grown in the European region. If these tokens become unstable, it could affect financial stability, the overall economy, and even inflation. Therefore, the European Central Bank needs to closely monitor the developments of stablecoins.

Policy Content: Slapen stated that the European Central Bank may soon have to regard stablecoins as a potential source of macroeconomic shocks, rather than merely regulatory issues. He warned that the rapid growth of stablecoins pegged to the dollar could have systemic effects on the European financial ecosystem. In the event of significant incidents such as a stablecoin run, the European Central Bank may need to reassess its monetary policy stance.

Market reaction: Slaypen's remarks have sparked concern in the market regarding regulation of stablecoins. Some investors worry that excessive regulation may hinder the development of stablecoins. However, others believe that moderate regulation is beneficial for the long-term healthy development of stablecoins. Overall, the market holds a wait-and-see attitude towards stablecoin regulation.

Expert opinion: A researcher from the German Economic Institute stated, “Stablecoins indeed have potential risks, but their current impact is limited. The European Central Bank needs to remain cautious, but should not overreact.” Another expert believes, “Regulation of stablecoins is an inevitable trend, but a balance must be sought between promoting innovation and preventing risks.”