As the US presidential race becomes more intense with less than a month away until Election Day, data from last week suggests that digital asset inflows have surged to $2.2 billion.

This figure marked the highest level since July, spurred by optimism for a potential Republican success in the election.

Inflows Surge Amid US Election Optimism

According to the latest edition of CoinShares’ Digital Asset Fund Flows Weekly Report, the trading volumes of investment products have surged by 30%, resulting in price appreciation, bringing total assets under management close to the $100 billion mark. The distribution of these inflows, however, varied greatly by region. The United States was a clear leader for the week, recording inflows of $2.3 billion.

The digital asset manager stated,

“We believe this renewed optimism stems from growing expectations of a Republican victory in the upcoming US elections, as they are generally viewed as more supportive of digital assets.”

Australia also saw a modest inflow of $1.4 million and emerged as the only other country to experience a positive flow. On the other hand, almost all other nations recorded minor outflows, with Canada, Sweden, and Switzerland leading with $20 million, $18 million, and $15 million outflows, respectively.

Additionally, Brazil and Germany also experienced outflows of $9 million and $6 million, while Hong Kong had a minor outflow of $1.5 million during the same period.

Bitcoin Leads While Multi-Asset Products Face Setback

Bitcoin led the market with inflows totaling $2.13 billion over the past week. The price increase also sparked interest in short-bitcoin products, which attracted $12 million. Interestingly, this was the largest inflow since March. Ethereum, too, benefited, recording $58 million in inflows.

Several altcoins followed suit, with Solana pulling in $2.4 million, Litecoin seeing $1.7 million, and XRP bringing in $700,000. Contrastingly, multi-asset products faced weekly outflows of $5.3 million, bringing an end to their impressive 17-week streak of continuous inflows.

Cardano and Binance also recorded outflows of $1.5 million and $0.8 million respectively.

Ethereum co-founder Vitalik Buterin has shared insights into Ethereum’s next upgrade on its technical roadmap – The Scourge.

It aims to fix issues involving centralization concerns in Ethereum’s staking and block production. Buterin has proposed several fixes to these shortcomings the layer-1 blockchain faces.

Ethereum’s Scourge to Reduce PoS Centralization

Following Ethereum’s Merge upgrade in late 2022, the smart contract blockchain transitioned from a proof-of-work (PoW) consensus mechanism to a proof-of-stake (PoS) model. This allowed ETH holders to stake their holdings for additional rewards, block production, and network security.

While this feature has profited the ecosystem, Buterin highlighted that staking centralization presents “one of the biggest risks” to the L1 blockchain, adding that it could birth further challenges within the network.

In an October 20 blog post, Buterin stressed that the economies of scale in PoS models can make large staking pools dominate the market as small stakers flock to large pools.

Around 30% of ETH’s supply is currently being staked. Buterin explained that this is enough to protect the blockchain from the 51% attack. However, if this figure grows significantly, there will be risks, such as staking becoming a “duty” for all ETH holders, a single liquid staking token (LST) overtaking the majority of the stake, and the “money” network effect from the blockchain, and the credibility of the slashing mechanism could weaken.

The Ethereum co-founder proposed a solution: limit the amount of ETH each user can stake and limit staking penalties to 12.5% of staked coins. Buterin also suggested implementing two-tier staking, dividing staked ETH into a slashable or unslashable stake.

The Scourge to Fix Block Construction Challenges

Regarding Ethereum’s block production, an Ethereum Foundation researcher disclosed that two entities, Beaverbuild and Titan Builder, produced 88.7% of ETH blocks within the first two weeks of this month, sparking concerns about centralization.

Presently, Ethereum adopts the proposer-builder separation for block production, a mechanism where builders create blocks for proposers to review. Buterin stated that actors performing “specialized” tasks can easily become centralized.

Buterin highlighted that Beaverbuild and Titan Builder cannot independently censor transactions since they do not produce 100% of the network’s blocks. Still, there is the risk of transactions being delayed for as long as 114 seconds instead of 6 seconds. This delay can be dangerous when it involves time-sensitive transactions and presents the risk of sandwich attacks.

The Ethereum creator shared two possible solutions to the issue. One is the fork-choice-enforced inclusion lists (FOCIL) proposal, in which proposers or stakers select transactions while builders decide how the transactions are ordered and “add new transactions.”

The second approach involves introducing multiple concurrent proposers (MCP) schemes like BRAID, which distributes “the block production process among many actors, in such a way that each proposer only needs to have a medium amount of sophistication to maximize their revenue.”

Bitcoin’s price took a turn for the worse in late Monday evening in Europe. The sellers have reappeared and established control, pushing the cryptocurrency below $67,000, losing about 2.5% in the past 24 hours.

The move has pushed the total liquidations in the derivatives market to about $200 million. In the past four hours alone, almost $70 million worth of leveraged positions—the majority of them long — were wiped off the market.

This latest move caused a lot of uncertainty in the market, with many wondering whether the rally to a new all-time high is put on pause.

Some popular traders such as X user Emperor even suggested that a further decline to $62,000 might be in the cards.

Bitcoin Price Update

1. Backtest of $66,000 level held and we moved higher. Want to see price hold above Previous Month High for continuation higher. My target of $69,000 has now been hit and I’m looking to relong dips.

2. I told you most will be scared to buy the dip at… pic.twitter.com/1NwHonte72

— Emperor (@EmperorBTC) October 21, 2024

The majority of the market is currently in a state of correction, as it’s clearly visible in the heatmap below. It’s worth noting that the declines remain relatively marginal at the time of this writing.