Newsletter Volume 29
Article 1: The Market This Week
Bitcoin Pizza Day, celebrated on Monday, May 22nd, commemorates the first documented use of Bitcoin to purchase physical goods. In 2010, Laszlo Hanyecz, an early Bitcoin miner, offered 10,000 BTC to anyone who would fulfill his request to buy two large pizzas using the cryptocurrency. Fellow forum user Jeremy Sturdivant stepped up to the challenge and ordered and delivered the pizzas to Hanyecz, marking a pivotal moment in the history of Bitcoin.
In other news, the cryptocurrency market saw a decline as investors remained cautious amidst a news-heavy week. The Bhutanese government’s business division, Druk Holding & Investments, expressed interest in crypto assets by investing in Bitcoin mining and drone technology.
US presidential candidate Vivek Ramaswamy announced that he will accept Bitcoin donations for his campaign, following Robert F. Kennedy Jr.’s similar announcement. KriptonMarket and Tether have partnered to allow bill payments and employee salaries in stablecoin.
Latam Gateway received a license from Brazil’s central bank to operate as a payment institution and electronic money issuer.
The International Organization of Securities Commissions (IOSCO) proposed 18 policy recommendations for digital assets and crypto markets to protect investors and maintain market integrity. South Korea proposed a bill requiring government officials to disclose their digital assets holdings. The CEO of cryptocurrency exchange Blockchain, Peter Smith, claimed that negative US cryptocurrency regulations have led to the departure of thousands of crypto experts to other countries. Bitfinex collaborated with Chilean crypto exchange OrionX to promote financial freedom and mass crypto adoption in the LATAM region.
Polygon founder Sandeep Nailwal believes that Web3 gaming is the largest-scale opportunity for mass crypto adoption. OpenAI CEO Sam Altman raised $115 million in a funding round for his cryptocurrency project, Worldcoin, which aims to distribute a crypto token to individuals for free after confirming their identity through iris scanning.
Overall, the cryptocurrency market continues to evolve and attract interest from governments, businesses, and individuals alike. While there are challenges and regulatory hurdles to overcome, the potential benefits of crypto assets and blockchain technology are significant and continue to drive innovation and investment in the space.
Total Crypto Market Cap: $1.15 T
Ethereum Market Cap: $217.47 B
ETH/BTC Ratio: 0.07
Ethereum Gas Price: 32 gwei
DeFi TVL: $74.37 B
Fear and Greed Index: 49 (Neutral)
Federal Reserve Balance Sheet: $8.45 T
Article 2: Weekly Review of IC15
The cryptocurrency market experienced a decline as investors remained cautious amid a news-heavy week. The IC15 Index, which tracks the top 15 cryptocurrencies by market capitalization, was down by 184 points to 37,403 at 4 pm. Despite the overall decline, some cryptocurrencies managed to make gains, including Tron, Shiba Inu, Chainlink, and Cardano, which saw increases in the 1–8% range. On the other hand, major losers were Solana, Uniswap, Polygon, and XRP, which experienced declines in the 1–3% range.
One piece of news that caught the attention of the crypto community was Druk Holding & Investments’ exploration of crypto assets. Druk Holding & Investments is the Bhutanese government’s business division, and it is reportedly considering investing in Bitcoin mining and drone technology. This news is significant as it shows that even governments are starting to recognize the potential of cryptocurrencies and blockchain technology.
In addition, KriptonMarket, an on-/off-ramp platform, and stablecoin issuer Tether have partnered to allow customers to pay bills with USDT and pay a percentage of employee salaries in stablecoin. This move is a step towards making cryptocurrencies more accessible and integrated into everyday life.
Finally, Latam Gateway, a payment processor, has gained a license from Brazil’s central bank to operate as a payment institution and electronic money issuer. This development is significant as it shows that regulators are becoming more open to the idea of cryptocurrencies and are willing to provide licenses to companies that operate within the crypto space.
Overall, the crypto market’s decline is a reminder that cryptocurrencies remain a volatile asset class. However, the news of governments and political candidates exploring cryptocurrencies, as well as the partnerships between crypto companies and traditional businesses, is a positive sign that the industry is becoming more mainstream. As more people and institutions recognize the potential of cryptocurrencies and blockchain technology, the crypto market is likely to continue to grow and mature.
On Tuesday, IC15 Index was up 383 points to 37,786 at 4 pm. Most of the coins in the Index were positive, with Polygon, Ethereum, Bitcoin, and Avalanche being the major gainers in the 1–3% range, while the major losers were Shiba Inu, Chainlink, Dogecoin, and Solana in the 0–2% range.
Hong Kong’s Securities and Futures Commission (SFC) plans to allow retail investors to access licensed crypto exchanges. UAE plans to build the world’s first Bitcoin tower, a Bitcoin shaped 40 story hotel in Dubai. Crypto exchange Coinbase launched a national ad campaign focusing on the role that will play by the crypto in modernizing the global financial system. Markets plunged as investors reacted to the poor UK inflation data as the UK core CPI reached its highest since 1992 and the US debt ceiling concerns where IC15 Index was down by 499 points to 37,287 at 4 pm. All the coins in the Index were in the red, with Litecoin, Chainlink, Uniswap, and Avalanche being the major losers in the 2–7% range.
Bitpanda, an Austrian cryptocurrency exchange, has partnered with Coinbase, an American cryptocurrency exchange, to enable European banks to offer digital asset services to their customers. This partnership will allow banks to offer their customers access to cryptocurrencies, including Bitcoin, Ethereum, and Litecoin, through a secure and regulated platform.
The move is significant as it marks a growing interest in cryptocurrencies by traditional financial institutions. Many banks have been hesitant to offer cryptocurrency services due to concerns over regulatory compliance and security risks. However, this partnership could help to alleviate some of these concerns by providing a secure and regulated platform for banks to offer digital asset services.
Article 3: Battle of Bulls and Bears.
The cryptocurrency market experienced a dip in its market capitalization, falling from $1.24 trillion to $1.2 trillion, representing a 2.13% drop. Sui (SUI) and PancakeSwap (CAKE) were the top losers, with an 11.15% and 9.9% loss in the last hours, respectively. Immutable (IMX), Mina (MINA), and Optimism (OP) also witnessed a 7% drop. Some market observers believe that Bitcoin and Ether’s recent price movements were largely driven by investors looking for alternative assets to park their funds amid a banking clampdown in the US.
Experts still believe that 2023 is giving a fresh start to the devastated crypto market, and investors with periodic and regular investment plans can do well. However, the surprises held by 2023 are always foreseen by investors. Higher-than-usual market volatility affected bulls and bears alike as crypto futures racked up $300 million in liquidations in the past 24 hours. Liquidation refers to when an exchange forcefully closes a trader’s leveraged position due to a partial or total loss of the trader’s initial margin. It happens when a trader is unable to meet the margin requirements for a leveraged position (fails to have sufficient funds to keep the trade open).
Large liquidations can signal the local top or bottom of a steep price move, which may allow traders to position themselves accordingly. Bitcoin and Ether briefly inched above $26,000 and $1,770, respectively, on Tuesday as investors brushed off the long-term effects of a regulatory clampdown on crypto-friendly banks and US consumer price index (CPI) data pointed to slowing inflation in the coming months.
However, the euphoria was short-lived as both major tokens dipped as much as 5% from Tuesday’s highs before gradually stabilizing. In Asian morning hours on Wednesday, bitcoin traded just under $25,000 while Ether traded slightly over $1,700. The volatility caused over $140 million in bitcoin futures and $80 million in Ether futures to take on losses. Of this, 58% of futures losses came from shorts, or bets against price rises, while the remaining came from longs, or bets on price rises — meaning both short sellers and long traders were hit almost equally.
Bitcoin and other major cryptocurrencies experienced a market-wide decline during the Asia trading day as traders in broader equity markets reacted to poor U.K. inflation figures. Bitcoin slid under the $27,000 level, marking a significant drop from its recent highs.
The hotter-than-expected U.K. core Consumer Prices Index (CPI) rate came in at 6.8%, the highest since 1992, against an expected figure of 6.2%. This means gains in core prices, excluding food, energy, and tobacco, accelerated by 6.8% last month from 6.2% in March. The figures are higher than expected for the third month in a row, dampening hopes of an economic recovery.
The surge in inflation has increased concerns over the global economic recovery, as central banks around the world grapple with rising inflation and the possibility of higher interest rates. The Bank of England has been under pressure to raise interest rates in response to the inflationary pressures.
The Bank of England’s Monetary Policy Committee has already raised its inflation forecast for this year to 3.0%, up from its previous estimate of 2.5%, and many analysts expect the central bank to raise interest rates sooner than previously anticipated.
Among other major tokens, futures on Conflux’s CFX tokens and Filecoin’s FIL had $8 million and $5 million in liquidations, respectively, as trading volumes for both surged on fundamental developments. Meanwhile, some market observers said the price action came as investors looked for alternative assets following last week’s collapse of Silicon Valley Bank. “Bitcoin’s rally to a new yearly high as Silicon Valley Bank falls and inflation remains stubborn shows that investors are looking to bitcoin for stability in highly uncertain market conditions,” said Alex Adelman, co-founder of bitcoin rewards app Lolli.
Article 4: Weekly Spotlight
Bitcoin experienced a slight increase in price on Monday as Asian traders returned to their desks, but the cryptocurrency market remained relatively stable as investor’s awaited news from Coinbase. The company recently received a notice from the Securities and Exchange Commission (SEC), which has left some uncertainty in the market. Despite this, the market’s overall sentiment remains positive following recent US Federal Open Market Committee (FOMC) rate hikes.
However, liquidity remains a significant concern in the crypto market. Bitcoin maintained its consolidation above the $27,000 support threshold, and Ethereum remained above the $1,700 level. Bitcoin rose slightly to hover around the $28,000 mark, and Ethereum increased by more than half a percent to surpass the $1,750 level. Altcoins saw mixed results, with BNB and Polygon both rising by about one percent, while Dogecoin, Litecoin, and Cardano posted similar cuts.
The global cryptocurrency market cap gained as much as one percent in the last 24 hours, rising to $1.16 trillion. However, trading volume fell one percent to $32.05 billion. The recent developments at Coinbase may impact investor sentiment in the coming weeks.
Polygon (MATIC) has faced a 30% drop in price since its bullish rise earlier this year, but an ascending trendline from June 2020 and the 200-day moving average have formed a solid safety net, preventing a significant plunge.
Investors are watching closely as Coinbase deals with the SEC’s notice. The company has already delayed its initial public offering (IPO) due to the SEC’s request for more information about its business. This delay has caused some concern among investors, as it has been seen as a sign that regulatory scrutiny of the crypto market is increasing.
Despite this, the market remains relatively stable, with Bitcoin and Ethereum holding steady. However, liquidity remains a significant concern, and many investors are waiting to see how the situation with Coinbase unfolds before making any major moves.
Overall, the cryptocurrency market remains positive, with the recent US FOMC rate hikes contributing to this sentiment. However, investors are keeping a close eye on developments at Coinbase and the regulatory landscape more broadly, as these factors could significantly impact the market in the coming weeks and months.
Core DAO is a blockchain network that aims to solve the blockchain trilemma by merging proof-of-work (PoW) and delegated proof-of-stake (DPoS). The blockchain trilemma refers to the trade-offs layer-1 solutions must make when building a blockchain network. Between optimal security, scalability and decentralization, networks must only choose two out of the three elements.
Core DAO has taken a different approach by using its Satoshi Plus Consensus. This consensus mechanism bridges PoW and DPoS, Rich Rines, an initial contributor at Core DAO, told Blockworks. “You get traditional DPoS elements on one side, then the other part that is quite unique is the proof-of-work part or delegated hash,” Rines said. “We have an actor in our system called relayers, and what they do is run an on-chain light client for Bitcoin.”
Bitcoin block headers get transmitted to the Bitcoin light client through these relayers, Rines explained. Miners who are securing the Bitcoin network will have the ability to opt into having their hash power the Satoshi Plus consensus — meaning they must delegate their hash to a validator run by themselves or a third party. It is important to note that this type of delegation will simply repurpose minerswork without them having to choose between securing two different networks. This way, the network can remain decentralized through Bitcoin computing power and scalable through DPoS.
