What major events are worth looking forward to in the crypto market in February?

Will the cryptocurrency market rise or fall in February?

Interestingly, looking at historical data, February has always been one of the best performing months for Bitcoin. In its entire history, there have only been two Februarys in which Bitcoin fell.

For ETH, the situation is even better as ETH has only gone down in February once in its history.

But at the same time, Bitcoin has never closed higher for 6 consecutive months. In the past 5 months, Bitcoin has been rising most of the time.

But regardless of Bitcoin’s upcoming price action, this month promises to be another month filled with opportunities for narrative and news traders.

Here are some of the big things to expect in February:

1. Hong Kong’s first spot BTC ETF

A few weeks ago, large Chinese asset manager Harvest Global Investments applied for Hong Kong’s first spot BTC ETF.

Another financial giant, Venture Smart Financial Holdings, has set the first quarter of 2024 as the target for launching a BTC ETF.

Additionally, Hong Kong regulators confirmed in December that they were considering accepting applications for a spot Bitcoin ETF.

Harvest Global Investments appears to be aiming to launch Hong Kong’s first spot Bitcoin ETF after February 10.

It sounds too good to be true, but maybe this month Hong Kong will approve a spot BTC ETF.

Additionally, just in case, Venture Smart Financial Holdings revealed that they plan to launch a spot ETH ETF in Hong Kong in the second quarter.

The launch of the spot Bitcoin ETF in the United States was undoubtedly a huge success, with total net flows exceeding $1.5 billion despite the huge selling pressure brought by Grayscale.

A spot Bitcoin ETF in Hong Kong could also attract a lot of money.

2. Starknet releases tokens

Starknet is one of the key projects in the Ethereum L2 field and one of the earliest ZK-Rollup Layer 2 networks built on Ethereum.

While there has been no official confirmation, many familiar with the Starknet ecosystem expect the STRK token to go live in February.

The project team has confirmed that they took a snapshot for token distribution more than 60 days ago, so the token launch should not be too far away.

Why is this important?

Every time a major L2 project announces the launch of its token, its ecosystem usually sees a surge in activity and TVL from then until after the token generation event. For example, in Arbitrum’s case, its TVL increased by $500 million within a week of the ARB token launch confirmation.

The prices of many Arbitrum ecosystem tokens also surged when the ARB token was first launched, and then gradually sold off after the ARB token generation event. (As the token launch ultimately proved to be a “sell-the-news” event.)

The same may happen with Starknet ecosystem tokens in the coming weeks, so this is something to keep in mind specifically if you trade narratives.

3. EigenLayer deposits reopened

The largest re-staking protocol, Eigenlayer, will open deposits again.

They removed the 200k ETH individual cap for LST, but now restaking points allocated to any liquidity staking token or liquidity restaking token are capped at 33% of total future issuance.

Personally, I am participating in the EigenLayer airdrop with a relatively large percentage of my ETH holdings because I think it is one of the best yield opportunities for ETH right now.

I’ll be posting a thread soon covering some of the reset strategies I used to maximize ETH gains + airdrop allocations.

But in short, I am using 4 liquidity re-staking protocols to win the EigenLayer airdrop:

Kelp DAO - Currently 100k Kelp points reward for every rsETH minted using Kelp, for a limited time.

Eigenpie - Eigenpie points will be doubled until February 12th

EtherFi - Get 20 more EigenLayer points for every ETH staked using EtherFi

Renzo - 200 ezPoints for every additional ETH staked until February 11th

EigenLayer TVL is currently valued at $2.1 billion.

It’s been growing so fast this year, and with so many ecosystem airdrops being announced every week, I don’t expect the hype around it to die down anytime soon.

Next, the final testnet of EigenLayer Stage 2 is scheduled to be released on February 7.

Phase 2 will enable re-stakers to finally begin delegating their ETH to operators running active validation services.

Here is a nice overview of EigenLayer stage 2:

3. Frax Finance launches L2

Frax Finance is an ecosystem of DeFi products built on Ethereum. Its most popular products include the stablecoin $FRAX and the liquid staking token frxETH.

The team has been working on Frax’s own L2 blockchain, which now appears to be just days away from launch (expected date is February 7).

Fraxtal (the name of Frax’s L2 product) is not just a simple fork of Optimism, it will bring some interesting innovations:

• Gas Token Flexibility: Fraxtal will use both frxETH and FRAX as Gas tokens.

• Blockspace Incentives: Users, applications, and developers who use the network will be rewarded with veFXS (the staked version of FXS).

• BAMM: A novel lending AMM feature (developed by the Frax team) that will be released within 1-2 months of Fraxtal’s launch, allowing users to leverage any token without the need for an oracle.

• Curve Finance and Ra (a DEX created by the Ramses Exchange team) have confirmed that they will be deployed on Fraxtal.

• The Frax Finance founder also made a bold prediction that he expects Fraxtal to attract hundreds of millions of dollars in the first month.

Whether this will come to fruition remains to be seen. We don’t know many details about Fraxtal yet, but more information may be shared on launch day.

4. Ethereum Dencun Upgrade: Final Testnet Opened

The highly anticipated final testnet of Ethereum’s Dencun upgrade will be launched on February 7. If the test goes well, the upgrade is expected to be launched on the mainnet in March or April.

The Dencun upgrade has attracted much attention mainly because it introduces a technology called “proto-danksharding.” Proto-danksharding is expected to significantly reduce transaction fees on L2 by reducing the “rent” that L2 pays for inheriting Ethereum’s security.

The L2 network has developed rapidly in the past two years. If Dencun can live up to the community’s expectations, it could attract a large number of new users to the Ethereum L2 network as it will make it more affordable for them.

5. Major token unlocking

At the beginning of the new month, another wave of tokens will be unlocked.

Wu Blockchain made a great table of the largest tokens expected to be unlocked in February. Two in particular caught my eye:

• APT - $229 million of APT (7.3% of its circulating supply) will be unlocked on February 11th.

• SAND - $94M of SAND (9% of its circulating supply) will be unlocked on February 14th.

Additionally, $330 million worth of AVAX tokens will be unlocked on February 22. However, while this may seem large in USD value, $330 million of AVAX only represents 2.6% of its circulating supply.

6. Other events worth noting

If you’re wondering what other major events are happening in the crypto space this month, check out the following crypto calendar.

I personally think there are a few key dates worth paying attention to:

• February 13 - US Consumer Price Index data

• February 12th - Next key date in the Ripple-SEC lawsuit

• February 23 - Binance founder CZ's hearing