10.28 AI Daily Report The encryption industry is in constant turmoil, and the balance between regulation and innovation remains to be resolved.

1. Headlines

1. Musk launches Grokipedia to challenge Wikipedia, sparking controversy over AI neutrality.

Elon Musk has officially launched the open-source artificial intelligence encyclopedia Grokipedia, positioned as an alternative to Wikipedia. Grokipedia is powered by Grok AI and currently has over 885,000 articles, with content entirely controlled and reviewed by AI.

Elon Musk stated through X that Grokipedia “is completely open source, anyone can use it for free to do anything”, with the goal of “the truth, the whole truth, and nothing but the truth”. However, its editing mechanism and content bias have sparked intense discussions about political bias and AI neutrality.

Industry insiders point out that the operational model of Grokipedia is fundamentally different from that of Wikipedia. Wikipedia allows anyone to edit content, which is reviewed by community volunteers, while Grokipedia is completely AI-driven. This means that Grok AI will determine which information is worth including, and which should be modified or deleted, potentially introducing risks of bias.

In addition, Grokipedia lacks the transparency and accountability of Wikipedia. The edit history and internal discussions of Wikipedia are open to everyone, while the editing process of Grokipedia is completely opaque. This may exacerbate public distrust of AI systems, especially against the backdrop of the rapid development of artificial intelligence today.

2. The easing of China-U.S. trade tensions drives a rebound in the crypto market, with Bitcoin surpassing $116,000.

Affected by the positive news of the easing of Sino-US trade relations, the cryptocurrency market experienced a significant rebound this week. Data shows that Bitcoin surged 8% in a single day, breaking through the $116,000 mark, reaching a new high in nearly three months.

Analysts say that during the Malaysia ASEAN summit, the two countries, China and the United States, reached a trade “framework” that postpones measures such as increasing tariffs on China, alleviating market concerns about the global economic outlook. Additionally, the expectation that the Federal Reserve will slow down interest rate hikes at this week's meeting has significantly improved the investment sentiment towards risk assets.

From a technical perspective, Bitcoin has shown typical “oversold” reversal signals after hitting an 8-month low last Friday. On-chain data indicates that the trading activity and number of addresses for Bitcoin have recently increased, suggesting that investors are buying the dip.

However, some analysts express skepticism about the sustainability of Bitcoin. They believe that the current rebound is primarily driven by sentiment factors and lacks fundamental support. Bitcoin is only expected to regain a long-term upward trend under conditions such as continuous inflow of institutional funds and the implementation of regulatory policies.

Overall, the easing of trade tensions between China and the United States has brought a breather for the crypto market, but the future trend still needs further observation.

3. Ethereum outflow exceeds $1.2 billion, Vitalik Buterin faces a major trust crisis.

Since the launch of the Ethereum spot ETF, the Ethereum ecosystem has been experiencing a massive outflow of funds, exceeding $1.2 billion. A previously unprecedented crisis of trust is emerging among Ethereum core researchers, developer community organizations, ConsenSys-related businesses, and external investors.

Vitalik Buterin, the co-founder of Ethereum, needs to better guide different stakeholders regarding direction and goals, as Ethereum has already become the largest decentralized business entity in both the entire cryptocurrency market and the traditional market. Historically, such a business model has never existed.

The challenges faced by Ethereum are unique. As an open-source project, it needs to balance the demands of various stakeholders, including the core development team, ecosystem companies, investors, and ordinary users. However, there are currently disagreements among the parties regarding the development roadmap of Ethereum, which has exacerbated the internal trust crisis.

Some analysts believe that Ethereum's layered architecture design may be the root cause of the split. The Ethereum Foundation focuses on the protocol level, while ecosystem companies emphasize innovation at the application level. The interests of both parties often conflict, requiring Vitalik Buterin as a mediator.

In addition, Ethereum faces fierce competition from other public chain projects such as Solana and Aptos. To maintain its leading position, Ethereum needs to accelerate its pace of innovation, improve scalability, and enhance user experience.

Overall, Ethereum is at a crucial crossroads. Vitalik needs to unite various forces, rebuild trust, and lead Ethereum into a new stage of development.

4. The crypto gaming track is in trouble, and the industry is calling for innovative business models.

The crypto gaming sector is facing unprecedented difficulties. On one hand, traditional gaming companies are skeptical about crypto games (We games ), believing that they lack appeal; on the other hand, crypto-native gaming projects have also failed to attract enough real users, with most still remaining in the conceptual stage.

Industry analysts point out that the challenges in the crypto gaming sector stem from two fundamental reasons: first, existing games mostly lack innovation and cannot provide players with a completely new experience; second, the design of the game token economic model has flaws that fail to truly incentivize long-term participation from players.

Some well-known investment institutions have begun to abandon the crypto gaming track. For example, the Pirate Nation project, which was invested in by Andreessen Horowitz(a16z) at the beginning of the year, and the recently funded Small Brain, despite having a good community foundation, has still failed to achieve explosive growth.

In the face of difficulties, there are calls within the industry for innovative business models. Some believe that adjustments should be made to the token unlocking terms and utility, shortening the investor lock-up period and increasing token liquidity. At the same time, there are voices suggesting that we should break free from the over-reliance on being listed on exchanges and truly create value for users.

Overall, the crypto gaming sector is at a crucial turning point. Only by innovating game content and business models can the industry regain vitality, attract more real users, and promote the healthy development of the entire crypto gaming ecosystem.

5. The exchange ecosystem becomes the biggest winner in the crypto industry, innovation support is precarious.

During this round of downturn in the cryptocurrency market, the exchange ecosystem has become the biggest winner. With a stable revenue model, exchanges not only provide good compensation for employees but also attract a large number of talented individuals to join.

In stark contrast, the environment faced by crypto startups is becoming increasingly difficult. On one hand, they struggle to secure funding support; on the other hand, it is challenging to recruit talent from the exchange ecosystem. This trend of “involution” severely hinders the innovative development of the industry.

At the Token2049 conference in Singapore, many attendees lamented that the industry is currently in a state of “disillusionment.” Entrepreneurs and investors generally hold a pessimistic attitude towards the current situation, believing that the business logic of the past five years is no longer viable.

Some experienced practitioners call for successful individuals to give back more to the industry, support public goods construction, and create a better innovation environment for early-stage entrepreneurs. Only by breaking away from the old model of over-reliance on exchange listings and truly creating value for users can the industry regain its vitality.

Overall, the cryptocurrency industry is undergoing a transformation period. While the exchange ecosystem can bring short-term benefits, in the long run, the lack of innovation support will hinder the development of the entire industry. Industry insiders are calling for the need to rebuild trust, unite together, and jointly explore new development paths for the industry.

2. Industry News

1. Bitcoin price breaks through the $114,000 mark, intensifying the battle between bulls and bears.

The price of Bitcoin has surpassed the $114,000 mark in the past 24 hours, reaching a high of $116,000. This rise has been mainly driven by positive news regarding the easing of trade relations between China and the United States. Both sides reached a trade “framework” agreement during the ASEAN summit in Kuala Lumpur, which includes measures such as delaying China's export restrictions on rare earths and suspending the imposition of a 100% tariff on China, alleviating market concerns about the global economic outlook.

However, after Bitcoin broke through $115,000, it experienced a pullback, indicating that both bulls and bears are fiercely contesting this key resistance level. Analysts point out that whether Bitcoin can decisively close above this range will determine if it can further challenge the historical high of $120,000. Conversely, if it is suppressed below this range, it may trigger further corrections.

From the trading volume data, the spot trading volume of Bitcoin has significantly increased in the past 24 hours, indicating a rise in market activity. However, the inflow of funds in the futures market is relatively lagging, reflecting a cautious sentiment among institutional investors regarding the future market. Overall, Bitcoin is expected to maintain high volatility in the short term, with attention on the Federal Reserve's interest rate decision this week becoming an important factor influencing the future market.

2. Ethereum's trading volume surpasses Bitcoin, and ecosystem activity continues to heat up.

Ethereum's spot trading volume surpassed Bitcoin in the past 24 hours, reaching $8.18 billion. This data further confirms the ongoing increase in the activity level of the Ethereum ecosystem.

Analysts believe that the surge in Ethereum's trading volume is primarily driven by its robust DeFi ecosystem. As innovative applications continue to emerge in the DeFi space, the usage of the Ethereum network is consistently rising, which has fueled the growth in trading demand. Additionally, popular sectors such as NFTs and GameFi on Ethereum have also contributed to the increase in trading volume.

Meanwhile, the price of Ethereum has maintained relatively strong performance over the past week, with a weekly increase of 8%. Analysts expect that with the continued warming of ecological activity, the price of Ethereum is likely to break through the $4500 mark and further challenge the historical high of $5000. However, some analysts warn that the issues of network congestion and high transaction fees on the Ethereum network remain pain points that restrict its development, and its progress in scaling needs to be closely monitored in the future.

3. The Solana ecosystem welcomes good news again, and the SOL price strengthens in the short term.

The Solana ecosystem has once again welcomed significant positive news in the past 24 hours. Grayscale Asset Management announced that its Solana trust product now supports staking functionality, while Wise Asset Management also announced the launch of the Solana staking ETF product “BSOL”.

Driven by this positive news, the price of SOL has shown a short-term strengthening in the past 24 hours, peaking at 36 dollars, with an intraday increase of over 10%. Analysts point out that institutional investors' continued investment in the Solana ecosystem reflects their confidence in the long-term development prospects of this public blockchain.

However, some analyses warn that after the SOL price broke through the $36 mark, it has shown a pullback, indicating a certain level of profit-taking pressure. If it cannot effectively break through and confirm above this position within this week, there is a risk of further pullback. Overall, the Solana ecosystem remains a popular track for institutional capital inflows, and its development is worth continuous attention.

4. Shiba Inu coin burning rate surges 28554%, does the Dogecoin ecosystem see a glimmer of hope again?

Shiba Inu Coin ( SHIB ) has seen a staggering 28554% increase in its burn rate over the past 24 hours, sparking heated discussions in the market about whether the Dogecoin ecosystem will see a resurgence.

Data shows that in the past 24 hours, the total amount of SHIB burned reached 138 million coins, a staggering increase of 28554% compared to the previous period. Analysts point out that this phenomenon may be related to the Shibarium upgrade. Shibarium is the second-layer scaling solution within the SHIB ecosystem, which is expected to significantly enhance network throughput and inject new vitality into the ecosystem.

However, some analysts are cautious about this. They believe that although the surge in burn volume is expected to drive SHIB prices higher in the short term, a real turnaround for SHIB will still require more practical scenarios and applications in ecological development. Simply relying on deflationary mechanisms is not sustainable; SHIB needs breakthroughs in underlying technology and ecological construction.

Overall, the surge in SHIB burn rate may just be a flash in the pan, but it has brought a glimmer of hope to the Dogecoin ecosystem. How the market unfolds in the future requires continuous observation of the actual progress of the Shibarium upgrade.

5. Cryptocurrency market sentiment warms up, the Fear and Greed Index returns to neutral territory.

Investor sentiment in the cryptocurrency market has noticeably warmed in the past 24 hours, with the Fear and Greed Index returning to neutral territory, scoring 51 points.

Analysts point out that this shift is mainly due to the rebound in Bitcoin prices. As Bitcoin breaks through the $114,000 mark, investors' confidence in the market outlook has been boosted, and sentiment has warmed accordingly.

At the same time, favorable news about the easing of trade relations between China and the United States, as well as expectations that the Federal Reserve may pause interest rate hikes this week, have contributed to a warming market sentiment.

However, some analysts warn that despite the improvement in sentiment, investors still need to remain cautious. Bitcoin still faces solid resistance around $115,000, and whether it can effectively break through remains to be seen. In addition, the Federal Reserve's interest rate decision may also bring new uncertainties to the market.

Overall, the warming of market sentiment may only be a short-term phase. Investors need to remain patient, closely monitor subsequent changes in fundamentals, and cautiously seize investment opportunities.

6. Cryptocurrency exchanges have been hacked, raising concerns about user fund security.

According to reports, a cryptocurrency exchange was recently hacked, raising widespread concerns in the market about the safety of user funds.

The exchange stated on social media that it has immediately launched a comprehensive security audit, initially confirming that there are no security issues on the platform and that user funds are safe. However, the exchange did not disclose specific details about the attack.

Analysts point out that in recent years, incidents of cryptocurrency exchanges being hacked have occurred from time to time, and the security of user funds has always been a pain point issue in the industry. Even top exchanges find it difficult to be completely immune to the risk of hacking.

Therefore, analysts urge exchanges to strengthen security measures, enhance transparency, and promptly disclose detailed information about security incidents. They also recommend that users adopt decentralized storage methods to reduce the risk of fund theft.

In addition, some analysts believe that decentralized exchange (DEX) may be a solution to the issue of user fund security. By eliminating the need for third-party custody of user funds, it can effectively mitigate the risk of hacker attacks. In the future, DEX is expected to play a greater role in ensuring user fund security.

7. The “altcoin fever” in the cryptocurrency market continues to heat up, and regulatory efforts may increase.

Recently, the “altcoin craze” in the cryptocurrency market has been heating up, raising concerns that regulatory measures may intensify.

Data shows that in just the past week, multiple altcoin ETF products have been intensively approved for listing, including spot and staking ETF products for public chains such as Solana and Hedera. In addition, several emerging altcoin projects have raised funds through ICO( for their initial token offerings), with financing scales reaching hundreds of millions of dollars.

Analysts point out that the ongoing rise of altcoins reflects, on one hand, institutional investors' favor for this sector, and on the other hand, exposes the regulatory vacuum. Currently, the U.S. Securities and Exchange Commission's regulatory policies for altcoin products still have ambiguous areas, bringing uncertainty to the market.

Analysts expect that with the continued rise of altcoin enthusiasm, regulatory authorities may increase their oversight in the future to standardize market order. At that time, stricter rules may be established for the issuance, listing, and other aspects of altcoin projects.

However, some analyses suggest that moderate regulation is beneficial for the long-term healthy development of the industry. An excessively lax regulatory environment may foster bubbles and speculative behaviors, ultimately harming the interests of investors. Therefore, while protecting investors' rights, it is also necessary to leave room for innovation in the industry.

8. The “AI frenzy” in the cryptocurrency market continues to heat up, and concept coins are performing actively.

In the past 24 hours, the “AI frenzy” in the cryptocurrency market has continued to heat up, with multiple AI concept coins performing actively.

Data shows that AI concept coins such as VIRTUAL, TAO, and AIXBT rank among the top in trading volume within the AI sector of the exchange. Among them, VIRTUAL has even topped the trading volume leaderboard in this sector.

Analysts point out that the active performance of AI concept cryptocurrencies is mainly driven by recent hot events in the AI field that frequently stimulate market sentiment. For example, the launch of the ChatGPT artificial intelligence assistant by OpenAI and the ongoing investments by tech giants like Google in the AI sector have brought new excitement to the market.

At the same time, many cryptocurrency projects have started to apply AI technology to their products and services, further increasing the attention on AI concept coins.

3. Economic Dynamics

1. The expectation for the Federal Reserve to cut interest rates this week has increased, and inflationary pressures may ease.

Economic Background: The U.S. economy has faced the dual challenges of inflationary pressure and economic slowdown over the past year. The latest data shows that the annualized quarterly GDP growth rate for the U.S. in the third quarter was 2.6%, slightly above expectations, but the inflation rate rose to 8.2% in September, far exceeding the Federal Reserve's target level of 2%. The unemployment rate hovers at a low of 3.5%, and the job market remains tight.

Important Event: The Federal Reserve will hold an interest rate decision meeting this week, and the market generally expects a further rate hike of 25 basis points, which would be the sixth rate hike this year. However, recent data shows that inflationary pressures have eased, coupled with signs of a slowdown in the labor market, the Federal Reserve may hint that the interest rate hike cycle is nearing its end this year.

Market Reaction: Investors will pay close attention to the Federal Reserve's comments from this week's meeting. If the Federal Reserve signals a dovish tone, suggesting that the pace of interest rate hikes will slow, this could boost risk assets and drive the stock market up. However, if the Federal Reserve maintains a hawkish stance, it could trigger market volatility.

Expert Opinion: Goldman Sachs Chief Economist Jan Hatzius stated: “Inflationary pressures are easing, and the Federal Reserve may end its rate hike cycle by the end of this year. However, close attention must still be paid to the job market and wage growth data to ensure inflation remains under control.” Standard Chartered Bank believes that the Federal Reserve may begin to cut interest rates in the first half of 2023 to support economic growth.

2. The easing of China-US trade relations has improved the global economic outlook.

Economic Background: As the two largest economies in the world, the trade relationship between China and the United States will have a significant impact on the global economy. In recent years, trade frictions between the two countries have intensified, impacting global supply chains, investments, and consumer confidence, becoming one of the main factors hindering global economic recovery.

Important event: During the ASEAN summit, China and the United States reached a trade “framework” agreement, including measures to delay China's rare earth export restrictions and suspend the imposition of 100% tariffs on China, alleviating the trade tensions between both sides. This is seen as an important signal for the easing of China-U.S. trade relations.

Market reaction: The news of the easing of Sino-U.S. trade relations has boosted risk appetite in global financial markets. The Asia-Pacific stock markets rose in response, and the three major U.S. stock indices reached new highs. Investors' confidence in the global economic outlook has strengthened, which is conducive to promoting trade, investment, and consumption.

Expert analysis: Deutsche Bank's Global Chief Economist Peter Hooper stated: “The easing of trade relations between China and the US will benefit the restoration of global supply chains, reduce uncertainty for enterprises, and thus promote investment and employment. However, both sides still need to reach a broader agreement on structural issues to achieve long-term economic benefits.”

3. The energy crisis in Europe intensifies, and the risk of economic recession increases.

Economic Background: Europe is facing the dual pressures of energy shortages and high inflation. The Russia-Ukraine conflict has disrupted Russian gas supplies, causing energy prices in Europe to surge. At the same time, the inflation rate in Europe climbed to a historic high of 10% in September, severely impacting consumer purchasing power.

Important event: The EU announced this week that it will impose a price cap on Russian oil to limit Russia's energy revenue. However, Russia has already threatened to completely cut off natural gas supplies to Europe if the price cap is implemented. This could further exacerbate Europe's energy crisis.

Market reaction: Energy shortages and high inflation have begun to affect industrial production and consumption in Europe. Eurozone manufacturing PMI data shows that manufacturing activity further contracted in October. Concerns among investors about the economic outlook in Europe have intensified, putting pressure on European stock markets.

Expert Opinion: IMF President Kristalina Georgieva warned that “If Russia completely cuts off gas supplies, Europe will face a severe economic recession.” Goldman Sachs predicts that if the energy crisis continues, the Eurozone economy will shrink by 1.1% in 2023.

4. The Bank of Japan may delay its interest rate hike schedule, increasing pressure on the yen.

Economic Background: Japan is one of the major economies in the world with relatively low inflationary pressure. However, the recent continuous depreciation of the yen has raised Japan's import costs, exacerbating inflationary pressure. In September, Japan's core inflation rate reached 3.0%, the highest level since 2014.

Important event: The Bank of Japan will announce its interest rate decision this week. The market expects the central bank to maintain its accommodative policy and not raise interest rates for now. However, the new Prime Minister's support for expansionary economic policies has led investors to believe that an interest rate hike may be delayed.

Market reaction: The onshore RMB exchange rate against the yen broke the 17 mark this week, hitting a new low since August 2015. The continued depreciation of the yen will further increase Japan's import costs, intensifying inflationary pressures and affecting the recovery process of the Japanese economy.

Expert analysis: The Governor of the Bank of Japan, Haruhiko Kuroda, previously stated that the central bank will patiently wait for inflation to continue rising and become entrenched in the economy before considering interest rate hikes. Daisaku Ueno, Chief FX Strategist at Mizuho Securities, believes: “If the Bank of Japan delays interest rate hikes, the yen may further depreciate.”

5. Emerging market currencies under pressure, global financial conditions may tighten.

Economic Background: Against the backdrop of high global inflation and interest rate hikes by major central banks, the currencies of emerging market countries are under heavy depreciation pressure. This has exacerbated inflation and debt repayment pressure in emerging economies, affecting their economic development prospects.

Important events: This week, both the Turkish lira and the Argentine peso depreciated significantly, causing concerns in the market about emerging market currencies to spread. The Turkish central bank unexpectedly raised interest rates but failed to stop the lira's depreciation. The Argentine peso accelerated its decline after a new wave of soaring inflation.

Market Reaction: The depreciation of emerging market currencies will increase the import costs of these countries, exacerbating inflationary pressures. At the same time, the rising cost of debt will also intensify their fiscal burdens. Investor concerns about the outlook for emerging markets are rising, leading to increased capital outflow pressures.

Expert Opinion: Citi Bank emerging market strategist David Lubin stated: “The depreciation of emerging market currencies reflects the tightening of global financial conditions, which will increase economic and financial pressure on emerging economies.” Goldman Sachs also warned that if the Federal Reserve continues to raise interest rates, emerging markets may face greater risks of financial turmoil.

4. Regulation & Policy

1. A member of the National Assembly of South Korea proposed to include stablecoins under legal regulation.

Park Sung-hoon, a member of the People Power Party of South Korea, will lead the proposal for an amendment to the Foreign Exchange Trading Act, aimed at filling the regulatory gap in the current legislation regarding stablecoins. The amendment will explicitly classify stablecoins as one of the legitimate means of payment, granting them the same legal status as traditional payment instruments such as South Korean government notes, banknotes, and coins.

Background: Stablecoins are rapidly spreading in the South Korean market, but due to their nature being different from existing fiat currencies, they have not been recognized as a means of payment under the Foreign Exchange Transaction Act, resulting in regulatory blind spots. The Bank of Korea has previously expressed concerns that US dollar stablecoins could be misused for illegal cross-border fund transfers and tax evasion.

Policy Content: The amendment will add stablecoins to the “definition” clause of Item 1 of Article 3 of the “Foreign Exchange Trading Law,” granting them the same legal status as traditional payment instruments. This means that stablecoins will be subject to regulation equivalent to that of fiat currency, helping to prevent illegal activities such as money laundering and tax evasion.

Market Reaction: Industry insiders generally believe that this move is beneficial for the healthy development of stablecoins in the Korean market. On one hand, a clear regulatory status will enhance the compliance and credibility of stablecoins; on the other hand, it also clears legal obstacles for the application of stablecoins in payment, settlement, and other areas.

Expert Opinion: Financial technology experts indicate that regulation of stablecoins is an inevitable trend. Reasonable regulation will promote the orderly development of the stablecoin market, but it is also necessary to be wary of the potential hindrance to innovation that excessive regulation may bring. The industry hopes that regulatory authorities can protect investor rights while also leaving space for stablecoin innovation.

2. The Governor of the People's Bank of China reiterates the stance against virtual currencies.

Pan Gongsheng, the Governor of the People's Bank of China, stated at the 2025 Financial Street Forum Annual Meeting that the People's Bank, in collaboration with relevant departments, will continue to crack down on the operation and speculation of virtual currencies within the country to maintain financial order.

Background: Since 2017, the People's Bank of China and regulatory authorities have repeatedly issued documents to vigorously crack down on the risks of virtual currency trading speculation. With the rapid development of virtual currencies such as stablecoins in recent years, the People's Bank of China's vigilance against their risks has also been increasing.

Policy content: Pan Gongsheng reiterated that the series of policy documents issued by the People's Bank of China to prevent and address the risks of speculation in virtual currency trading remain effective. In the future, the People's Bank of China will work with law enforcement agencies to continue to crack down on domestic virtual currency operations and speculative activities.

Market reaction: Industry insiders believe that the People's Bank of China’s high-pressure stance means the development prospects of virtual currencies in China remain grim. Some cryptocurrency companies and investors may continue to shift their focus to overseas markets.

Expert Analysis: Chen Wei, director of the Internet Finance Research Center at Tsinghua University, believes that the stance of the People's Bank of China reflects a high level of attention to financial risks. In the context of promoting the digital RMB, a strict crackdown on other virtual currencies is beneficial for maintaining the status of fiat currency. However, it is also necessary to be wary of the potential loss of innovation caused by excessive suppression.