Newsletter Volume 30
Article 1: The Market This Week
On Monday, Bitcoin remained stagnant for the most part, hovering around $27,500 and experiencing slight dips below that level. However, on Monday, BTC surged to its highest price since May 8, reaching nearly $28,500. This jump was fueled by news that the US government had reached a deal on the debt limit. Alternative coins have seen an increase in value. Ethereum has experienced a significant increase of almost 3%, reaching a price of $1,900, which is the highest it has been in three weeks. Other cryptocurrencies such as Binance, Ripple, Cardano, Dogecoin, MATIC, Solana, Polkadot, Litecoin, and Avalanche have also seen an increase in value. LDO and QNT have experienced the most significant increase, with a rise of 5–6%. The total market capitalization of the cryptocurrency market has surpassed $1.170 trillion, with a daily increase of $30 billion and a four-day increase of $70 billion.
Australian customers of Binance, the largest cryptocurrency exchange in the world, have been selling their Bitcoin holdings at a significant discount due to the exchange losing its banking partners and facing regulatory scrutiny. Binance recently announced that it would no longer facilitate Australian Dollar bank transfers using PayID, prompting many customers to cash out their positions quickly. As a result, Bitcoin’s price on Binance Australia dropped to around A $34,000, compared to A$43,000 on BTC Markets, a local competitor. The Australian Securities and Investments Commission (ASIC) also reviewed Binance’s derivatives business after an error on Binance’s part led to the misclassification of 500 users as “wholesale investors,” resulting in the closure of their derivative positions, a move that local regulations mandate for retail traders. Binance closed its Australian derivatives business after voluntarily relinquishing its financial services license, but the exchange stated that the closure would not affect Australians using its spot exchange product.
Norges Bank’s call for a national strategy for specific crypto regulation is in response to the growing use of cryptocurrencies in the country. The central bank has emphasized the need for clear regulations to protect consumers and prevent financial crime, as well as to ensure that Norway’s financial system remains stable and secure.
The central bank has suggested that any national strategy for crypto regulation should include measures to prevent money laundering and terrorist financing, as well as to ensure that cryptocurrencies are not used for illegal activities. The bank has also highlighted the need for clear rules on taxation and consumer protection, as well as for the regulation of cryptocurrency exchanges and other crypto-related businesses.
Meanwhile, Brazil is making progress in the development of its own CBDC, with the country’s central bank selecting 14 institutions to participate in its CBDC pilot study. The pilot study will test the use of a digital currency based on blockchain technology, with the aim of creating a more efficient and secure payment system in Brazil.
The institutions selected for the pilot study include Visa, Microsoft, Accenture, and several Brazilian banks and financial institutions. The pilot study will be conducted in two phases, with the first phase focusing on technical aspects such as security and interoperability, and the second phase testing the use of the CBDC in real-world scenarios. The development of a CBDC in Brazil is seen as a way to modernize the country’s payment system, which is currently dominated by cash transactions. A CBDC would allow for faster and more secure transactions, as well as greater financial inclusion for those who do not have access to traditional banking services.
The use of CBDCs is becoming increasingly popular around the world, with several countries, including China and Sweden, already testing their own digital currencies. CBDCs are seen as a way to modernize the global financial system and reduce the reliance on traditional currencies and payment systems.
Several cryptocurrency companies are gearing up to apply for licenses in Hong Kong to attract retail crypto traders. On June 1, BitHK, a local platform launched by CoinEx, announced its plans to submit its Virtual Asset Service Provider (VASP) license application to the securities regulator. Meanwhile, Huobi’s Hong Kong entity tweeted on May 29 that it was offering crypto trading to local retail traders and had already submitted its VASP application to the Securities and Futures Commission (SFC). The competition to attract Hong Kong’s retail crypto traders is set to intensify in the coming days.
KEY METRICs:
Total Crypto Market Cap: $1.18 T
Ethereum Market Cap: $226.90 B
ETH/BTC Ratio: 0.07
Ethereum Gas Price: 24 gwei
DeFi TVL: $75.54 B
Fear and Greed Index: 50 (Neutral)
Federal Reserve Balance Sheet: $8.45 T
Article 2: Weekly Review of IC15
The cryptocurrency market is currently experiencing a positive sentiment due to the news of the US debt ceiling being raised to $28.9 trillion. This news has alleviated concerns about the potential consequences of a default on the US economy and global financial markets. Additionally, the US personal consumption data surpassed expectations, indicating that the country’s economic recovery from the pandemic is progressing well. As a result, investor confidence in the US economy and global financial system has increased, leading to a positive impact on the cryptocurrency market. In India, crypto exchanges are facing a challenging business environment due to the country’s regulatory uncertainty and the ongoing crypto winter. To survive and grow, these exchanges are exploring new revenue models, such as offering crypto loans, staking services, and NFT marketplaces. They are also looking to expand their user base by offering more educational resources and building stronger partnerships with banks and other financial institutions.
The benchmark IC15 Index was volatile and moved in the 400 points on Wednesday range to remain flat with 35 points up to 38,312 at 4 pm. Most of the coins in the Index were positive, with XRP, Solana, Litecoin, and Uniswap being the major gainers in the 0–5% range, while the major losers were Polygon, Shiba Inu, Tron, and Dogecoin in the 0–2% range. The RBI Annual Report emphasizes the expansion plan of its ongoing CBDC, the digital rupee, pilot to more banks and locations. The Bank of Japan released the results of the second phase pilot of its CBDC on proof of concept, where they tested technology to implement upper limits on CBDC holdings. Laos is stepping forward in blockchain technology as their government held a conference with industry experts to discuss the digital transformation of Laos using digital technology and also discussed the theory of Blockchain 4.0. Russia scraps the plan to launch a national cryptocurrency exchange, instead, works on regulations for the launch and maintenance of cryptocurrency trading platforms.
In Europe, the ECB has published the results of its CBDC prototyping exercise, which involved creating a digital euro prototype and testing its performance in different scenarios. The bank is now ready to begin a pilot study of the digital euro, which will involve testing the currency in real-world settings and gathering feedback from users and stakeholders. Finally, in Hong Kong, the police have launched CyberDefender, a metaverse platform aimed at educating citizens about the risks associated with the Web3 and metaverse industries. The platform offers a range of resources, including videos, articles, and interactive simulations, to help users understand the potential dangers and how to protect themselves. This initiative reflects the growing awareness of the risks and challenges associated with the metaverse and the need for greater education and awareness among the general public.
The cryptocurrency market slipped marginally amid the expectations of another rate hike by the US Fed and debt ceiling concerns as the bill goes to the Senate for voting. The benchmark IC15 Index was down by 136 points to 37,460 at 4 pm. Most of the coins in the Index were in the red, with Cardano, Polkadot, Tron, and Chainlink being the major losers in the 0–4% range, while the major gainers were Litecoin, Polygon, Avalanche, and Dogecoin, in the 0–5%. The European Union officials signed the Markets in Crypto Assets (MiCA) regulation into law after the approval from finance ministers. The central bank of UAE published a new anti-money laundering and counter-terrorism financing guidance for all licensed financial institutions’ dealings in virtual assets required to verify the identities of all customers.
Article 3: Battle of Bulls and Bears
Cryptocurrency markets were lower on Thursday amid concerns over the US debt ceiling. Bitcoin fell 1.4% to $26,790, while Ethereum hovered above the $1,850 level. Analysts predict a choppy crypto market in the coming weeks if the decision on the debt ceiling bill remains unclear. The global cryptocurrency market cap fell 0.79% in the last 24 hours to around $1.13tn. The market cap for Bitcoin stood at approximately $519bn with a dominance of 46.05%, according to CoinMarketCap. Technical analysis. Cryptocurrencies represent an internet-based medium of exchange that takes advantage of cryptographical functions in order to conduct financial transactions.
They leverage blockchain technology to achieve decentralization, immutability, and transparency. According to the latest crypto news, there are thousands of cryptocurrencies in existence. However, the most popular ones include Bitcoin, Ethereum, Ripple, Binance Coin, Bitcoin Cash, Tezos, Tron, Litecoin, and EOS, acquire more than 80% of the total market cap. Decentralized cryptocurrencies such as Bitcoin, have one substantial advantage — no single authority can control them. Instead, they are governed by an algorithm that’s pre-programmed and defined. This takes away the human factor and makes the entire network transparent and immutable. Cryptocurrencies can be sent directly between two parties, in a rapid and cheap process, compared to traditional bank transfers. Since there is no central authority or a middleman, the users can go through the process without having to worry about complying with different rules. The primary cryptocurrency had a choppy month. Looking at the end of it, one can see that it failed to breach the resistance levels at $27,500 despite several attempts.
Ether, which is the second largest cryptocurrency, experienced a 1.3% decrease in value to $1,877.6 and has a market capitalization of $224.7 billion. The trade volume for Ethereum over the past 24 hours was $5.5 billion. The crypto fear and greed index has decreased by 2 points since yesterday and currently sits at 52 points, indicating a neutral sentiment among investors. According to Parth Chaturvedi of CoinSwitch Ventures, investors are still approaching the cryptocurrency market with caution. Moreover, the last one, which came on Wednesday, saw the asset jump to $28,500 following the debt ceiling deal by the US government. However, that was short-lived, as the cryptocurrency retraced to under $27,500 by Thursday. Yesterday’s rejection was particularly harmful as BTC fell hard by over a grand in hours. It managed to stay north of $27,000 at first, but the past 24 hours brought another leg down. This time, bitcoin fell to a multi-day low of $26,600. Despite recovering a few hundred dollars since then, BTC still trades in the red on a daily scale.
Article 4: Weekly Spotlight
The House of Representatives approved the debt ceiling bill on Wednesday evening, which was crucial as the U.S. was expected to run out of funds to pay its bills on time. In this context, “First Mover” explores how this legislation may affect the cryptocurrency markets in light of the Federal Reserve’s forthcoming decision on interest rates in June. The bill passed with support from 44 Democrats, 17 Republicans, and two independents. Sixty votes were required to approve the measure in a 100-seat chamber that Democrats only narrowly control.
The deal easily cleared the House on Wednesday evening by a vote of 314–117. Some 165 Democrats joined 149 Republicans in approving it by the required simple majority. If the US defaulted on its debt, it would limit the government’s ability to borrow more money or pay all of its bills, and it would also threaten to wreak havoc overseas, affecting prices and mortgage rates in other countries. The bill’s passage came after senators first proposed 11 amendments to the debt ceiling bill, but they were all rejected in quick order, paving the way for a final vote. If a single one of the amendments had passed, the whole bill would have had to be sent back to the House, leaving little time to ensure final passage of the measure before the US fell off a fiscal cliff. Democratic Majority leader Chuck Schumer said “America can breathe a sigh of relief because in this process we are avoiding default.” In a rare display of bipartisanship, Senate Republican leader Mitch McConnell told reporters he would be “proud to support it without delay. Bitcoin has experienced a 63.96% change this year, which is a significant increase from its price at the beginning of the year. However, this change is still relatively small compared to the gains that Bitcoin has made in previous years. In 2017, for example, Bitcoin’s price increased by over 1,300%, making it one of the best-performing assets of the year. Despite the recent price fluctuations, Bitcoin remains a popular investment option for many people. Its decentralized nature and the potential for high returns make it an attractive investment for those who are willing to take risks. However, it is important to remember that investing in Bitcoin is not without risks, and investors should do their research before investing in any cryptocurrency.
Ethereum has managed to hold above the support level of $1,840 and has started a recovery wave from its low of $1,838. Similar to Bitcoin, Ethereum has seen a break above the $1,870 resistance level and has climbed above the 23.6% Fib retracement level of the downward move from the $1,916 swing high to the $1,838 low. On the hourly chart of ETH/USD, there was also a break above a key bearish trend line with resistance near $1,870. Ether is now trading above the 100-hourly Simple Moving Average and there are chances of a short-term inverse head and shoulders pattern on the same chart. The immediate resistance is near the $1,880 zone, with the next major resistance near the $1,885 level or the 61.8% Fib retracement level of the downward move from the $1,916 swing high to the $1,838 low. If Ethereum fails to clear the $1,880 resistance, it could start another decline. The initial support on the downside is near the $1,870 level and the 100-hourly Simple Moving Average, with the next major support near the $1,855 zone. If there is a break below the $1,855 support, the price could decline toward the $1,840 support. Any further losses may send the price toward the $1,800 level or even $1,740 in the coming sessions.
