Degen Digest: January 15, 2025
Explore this week’s Degen Digest for insights on XRP’s explosive growth, speculation on an XRP-ETH flippening, and the collapse of the Usual token.
Jan 15, 2025
Welcome to this week's Degen Digest, your go-to source for in-depth analysis of the crypto market. In this edition, we’ll explore the recent explosive performance of XRP, the challenges facing the Usual token and its stablecoins, and the broader implications for both retail and institutional investors.
TL;DR:
- XRP’s Outperformance: XRP broke resistance levels and outperformed BTC and ETH, driven by upcoming ETF decisions, favorable legal developments, and high-profile endorsements.
- XRP vs ETH Flippening?: Optimistic analysts speculate on XRP surpassing ETH’s market cap, but caution is advised as market volatility looms around January 20.
- Usual Token Collapse: The Usual project faced legitimacy concerns, stablecoin depegging, and investor backlash, highlighting the risks of poorly managed DeFi platforms.
1. XRP’s Rise and Market Outperformance
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Over the past week, $XRP has demonstrated remarkable strength, breaking through key resistance levels and outperforming both Bitcoin (BTC) and Ethereum (ETH). Since its December 2 peak, XRP has confirmed three higher lows and is now charting a renewed path to higher highs.
Despite Bitcoin’s dip below the $90,000 mark on January 13, which triggered a sell-off across many altcoins, XRP successfully defended its price levels and even rebounded sharply. This resilience has been particularly evident on Korean exchanges, where XRP has already surpassed its 2023 highs, accompanied by significant trading volume.
Key Drivers of XRP’s Performance
- Upcoming ETF Decisions: Several ETF approvals for XRP are expected to be announced soon. According to JPMorgan, an approved XRP ETF could attract as much as $8 billion in inflows, significantly boosting market demand.
- Legal Tailwinds: Following the favorable 2023 ruling from the New York District Court that deemed XRP not a security, the SEC’s appeal deadline is approaching. If the SEC decides to drop its appeal, it could potentially solidify XRP’s legal standing and increase the likelihood of ETF approval.
- High-Profile Endorsements: Recent media coverage of XRP executives dining with former U.S. President Donald Trump has further fueled speculation about XRP’s growing influence in the regulatory and political landscape.
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XRP vs. ETH: Could a Flippening Be on the Horizon?
XRP’s market cap currently stands at $164 billion, compared to Ethereum’s $390 billion. With ETF approval, a potential SEC appeal withdrawal, and ETH’s underperformance, some market analysts are speculating on a possible “XRP-ETH flippening”. While this scenario represents an optimistic outlook, it is contingent on a combination of favorable factors aligning perfectly.
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Market Sentiment: Proceed with Caution
As we approach January 20, a date linked to Trump’s potential reentry into U.S. politics, heightened market volatility is expected. Although many altcoins are showing sharp rebounds, investor sentiment appears to be shifting from fear to euphoria too quickly. We recommend adopting a defensive trading strategy around this key date to mitigate risks.
For more insights into altcoin market cycles and crypto market sentiment indicators, check out our article on crypto market sentiment analysis.
2. The Collapse of $USUAL and Its Stablecoins
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On January 7, a prominent Chinese crypto KOL raised concerns about the Usual project, a decentralized finance (DeFi) platform tied to Real World Assets (RWA). The allegations claimed that Usual operates without genuine RWA collateral, relying instead on Hashnote’s USYC mechanism, raising questions about its legitimacy.
Key Events Leading to the $USUAL Decline
- Stablecoin Depegging: On January 10, $USUAL’s stablecoin, USD0++, began to depeg from its $1 value. This followed an announcement from the Usual team introducing a new "dual exit" mechanism, which allowed staked USD0++ holders two options:
- Option 1: Immediate redemption at $0.87 per USD0++.
- Option 2: 1:1 unstaking at $1 per USD0++, but requiring the forfeiture of previously accrued $USUAL rewards.
This led to significant sell-offs, with most participants opting for the immediate redemption option, effectively driving the market price of USD0++ to $0.94.
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- Market Fallout: Trust in the project plummeted following these changes, compounded by allegations of mismanagement. The Usual Foundation faced heavy criticism for arbitrarily conducting 1:1 redemptions for its own holdings, further eroding market confidence.
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Implications for DeFi Investors
The $USUAL collapse highlights the risks of investing in DeFi projects with opaque mechanisms and questionable collateral structures. Before allocating funds, investors are advised to thoroughly vet projects for legitimacy and transparency. For tips on safeguarding your investments, refer to our guide on protecting DeFi trades from MEV attacks.
For additional details on the collapse, including blockchain transaction records, visit the Etherscan token transactions page.
Conclusion: Key Takeaways
- XRP’s Momentum: While XRP’s recent performance is promising, the January 20 political developments could introduce significant volatility. Maintain a cautious approach in the short term while monitoring key legal and regulatory updates.
- DeFi Risks: The Usual token’s decline is a stark reminder of the risks inherent in DeFi investments. Always perform due diligence and evaluate the legitimacy of projects before committing funds.
For a deeper dive into trading strategies and risk management, explore our complete guide on crypto trading strategies.
Stay tuned for next week’s Degen Digest as we continue to bring you cutting-edge analysis and actionable insights from the crypto world. For more updates, subscribe to the SnapX Blog and follow us on Twitter for real-time market commentary.
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