Newsletter Volume 32
Article 1: The Market This Week.
Cryptocurrency markets were mixed on Monday, with Bitcoin, XRP, Cardano, and Polygon up, while Ethereum, BNB, Solana, and Shiba Inu were down. The global cryptocurrency market cap was trading lower at around $1.05tn, falling 0.12% over the last 24 hours. The market was yet to respond to the US Federal Reserve’s decision to pause rate hikes, according to Shivam Thakral, CEO of BuyUcoin. However, the crypto market may respond positively to the latest development related to rate hikes in the coming weeks, he added, but the real relief will come if interest rates are brought down to boost market liquidity.
The total volume in DeFi is currently 1.9 billion, which accounts for 7% of the total crypto market 24-hour volume. The volume of all stablecoins is now $25.15bn, which is 94% of the total crypto market 24-hour volume. The market cap of Bitcoin, the world’s largest cryptocurrency, was around $501bn, and its volume stood at approximately $11.55bn, falling by 24% over the last 24 hours. Bitcoin’s dominance is currently 47%, an increase of 0.21% over the day, according to CoinMarketCap.
The crypto fear and greed index has maintained its position in the neutral zone since yesterday with a score of 47 points. This could be attributed to the ongoing lawsuits by the SEC against Binance and Coinbase, which have led to a mass exodus of deposits in these exchanges, said Parth Chaturvedi, Investments Lead, CoinSwitch Ventures. Major market oscillators point toward a neutral sentiment, according to Rajagopal Menon, Vice President at WazirX. The Relative Strength Index (14), one of the key indicators, sits at 41, with a neutral outlook. The Stochastic %K (14, 3, 3) and the Average Directional Index (14) are at 18 and 26, respectively, further indicating a neutral market.
Inflation data later in the day will be key for the cryptocurrency markets, which have observed brisk selling pressure over the weekend. The US Fed has increased interest rates by 500 basis points since it started its war against inflation and prevented the economy from slipping into possible recession. The crypto market may respond positively to the latest development related to rate hikes in the coming weeks, but real relief will come if interest rates are brought down to boost market liquidity.
Changpeng “CZ” Zhao, the CEO of Binance, has stated that the world’s largest cryptocurrency exchange has not sold bitcoin (BTC) or bnb coin (BNB) to prevent the price of the latter from dropping below a certain level. He posted on Twitter on 9 June that rumours of such sales were unfounded, and that Binance still held a bag of FTT. He suggested that the rumours may have been spread by short interest among Crypto Twitter members. On 8 June, tweets by traders @JW100x and @52kskew, which claimed that there was a correlation between a sell-off in bitcoin and a purchase of BNB, went viral, with the tweets viewed over three million times in total. The tweets suggested that USDT reserves had been used to purchase BNB since 27 May, and that BNB was being sold off for BUSD to suppress volatility in BTC. BUSD was then used to buy BTC to suppress downside volatility, so that BTC could be swapped out for USDT. @JW100x said that as spot bitcoin was sold off, BNB was purchased, which defended the $220 liquidation but also capped the upside potential of bitcoin.
The number of attacks targeting cryptocurrency data has increased by 300% over the past year, according to the 2023 Data Breach Investigations Report (DBIR) released by Verizon. The report revealed that 48 incidents were reported in 2022, up from 12 the previous year. The rise in attacks is due to the increased value of crypto assets, which presents many opportunities for attackers to gain access to valuable data. However, David Hylender, senior manager of threat intelligence for Verizon, suggests that the trend may change this year as circumstances have changed. Of the attacks submitted to the Verizon DBIR, half used an exploit, more than 40% used stolen credentials, and about a quarter used a phishing attack. While some attacks used email as a vector, most compromised the user’s account through the web application or an application programming interface.
Total Crypto Market Cap $1.07 T
Bitcoin Market Cap : $494.95 B
Ethereum Market Cap : $200.64 B
ETH/BTC Ratio : 0.07
Ethereum Gas Price : 15 gwei
DeFi TVL : $68.12 B
Fear and Greed Index : 47 (Neutral)
Federal Reserve Balance Sheet: $8.38
Article 2: Weekly Review Of IC15.
The global cryptocurrency market experienced a surge in trading as investors eagerly awaited inflation data to be released later in the day. The IC15 Index showed a gain of 233 points, reaching 36,545 by 4 pm. The increase was primarily driven by the positive performance of Polygon and Cardano, which saw gains of 5.86% and 5.46%, respectively. However, Avalanche, Litecoin, Shiba Inu, and Dogecoin saw losses ranging from 0–2%. US Senator Cynthia Lummis is currently working towards creating a favorable regulatory framework for cryptocurrencies, with the aim of promoting rapid adoption and facilitating digital asset trading in the country. Meanwhile, the Nigerian government has implemented a 10% tax on gains from the disposal of digital assets, including cryptocurrencies, as a means of improving monetary transparency, boosting revenue generation, and promoting economic growth.
The Hong Kong Monetary Authority has announced plans to develop a retail central bank digital currency for use in retail transactions in the coming months. In a recent event, experts and business leaders from Iran and Russia came together to discuss the potential applications and risks associated with cryptocurrencies and blockchain technology.
The cryptocurrency market experienced a positive trend due to the expected US inflation and the Federal Reserve’s monetary policy meeting. The IC15 Index rose by 117 points, reaching 36,662 at 4 pm. Uniswap, Polkadot, Avalanche, and Shiba Inu were the major contributors to the Index gain, with a range of 2–5%, while only three cryptocurrencies, Cardano, Solana, and Ethereum, lost value in the 0–2% range. The University of Toronto and Ripple’s University Research Blockchain Initiative (UBRI) collaborated to launch an independent XRP ledger validator. The partnership aims to encourage talent and support the blockchain and cryptocurrency industry in the area. The Bank of Thailand is seeking 10,000 participants for its retail CBDC pilot with three payment service providers. JP Morgan’s research report highlights the necessity of comprehensive cryptocurrency regulation in the US and the SEC’s responsibilities.
The President of Brazil has signed a decree that will bring regulatory clarity to the digital assets market by allowing the Central Bank of Brazil and the Securities and Exchange Commission to oversee it. Meanwhile, the Hong Kong Monetary Authority is urging three major banks to accept crypto exchanges as clients and provide them with appropriate services. Due to inflation, Turkish residents are turning to cryptocurrency, particularly the USDT stablecoin, amid the collapse of their national currency, the lira, which is attracting more Turks towards cryptocurrency. The cryptocurrency market experienced a dip in value in anticipation of the US Federal Reserve’s monetary policy meeting scheduled for later in the day.
The IC15 Index fell by 138 points to 36,524 at 4 pm on Thursday, with XRP, Cardano, Solana, and Litecoin being the major losers in the 0–5% range. Meanwhile, BNB, Chainlink, Tron, and Uniswap gained in the 1–6% range. The Hong Kong Monetary Authority is working towards becoming a Web3 hub and has initiated the regulation of stablecoins after completing a public consultation. The aim is to provide clear regulatory guidelines by the end of 2024. The US is also looking to establish regulatory clarity for the stablecoin market. China, on the other hand, is reconsidering its stance on the crypto ban following recent regulatory developments in Hong Kong. Russia and China are poised to overtake the US in crypto adoption amid regulatory uncertainty and the SEC’s crackdown on crypto exchanges in the US. Taiwan Mobile Company, a telecoms giant, is collaborating with domestic crypto platforms to explore the cryptocurrency space and boost Web3 adoption in the country.
Article 3: The Battle Bulls and Bears.
Despite a renewed crackdown by the US Securities and Exchange Commission (SEC) on the cryptocurrency market, Bitcoin has remained relatively stable, holding support above $25,000 and sitting above the critical 200-day Exponential Moving Average (EMA). This stability has resulted in Bitcoin’s market share being close to 50%, marking a new high since April 2021. However, if the support at $25,000 weakens, bulls will have an uphill battle to avoid a potential dip to $24,000 in search of fresh liquidity. The SEC has launched lawsuits against Binance and Coinbase, which some crypto experts believe are politically motivated. The SEC’s claims against Binance include the sale of unregistered securities and commingling customer funds, while the agency alleges that the majority of assets traded on Coinbase are unregistered securities. Tokens like Solana, Polygon, and Algorand have been implicated in these allegations.
As many of the cryptocurrencies listed by the SEC as securities struggle to find footing in the market, Bitcoin has exhibited commendable stability. However, the legal actions against Binance and Coinbase could take years to resolve, and the SEC’s desire to assert its power in the industry could lead to further regulatory actions in the future. Traders have shown concern as millions of dollars’ worth of tether (USDT) stablecoins were sold off on Uniswap and Curve pools on Thursday morning. Balances of USDT on Curve’s 3pool, which is made up of USDT, USDC, and DAI, rose to over 72%, indicating that traders had exchanged tens of millions of USDT for USD coin (USDC) and DAI stablecoins. The 3pool now holds over $300m of USDT, and nearly $55m each of DAI and USDC.
This imbalance suggests an increased preference for DAI and USDC over tether. This sentiment was previously observed during Terra’s implosion last May and the collapse of crypto exchange FTX in November. Tether CTO Paolo Arduino suggested in a tweet that some traders could be looking to “capitalize on the general sentiment” in the broader crypto markets, which has dipped in the past 24 hours. The current imbalance in the stablecoin market indicates that more people are preferring DAI and USDC over tether, as seen before during the Terra and FTX incidents. Tether’s CTO Paolo Arduino thinks that some traders might be taking advantage of the negative sentiment in the overall crypto market, which has decreased in the last day. Representative Patrick McHenry, the chairman of the House Financial Services Committee, has announced plans to hold a committee vote on a bill that would establish a regulatory framework for cryptocurrency products. The bill is expected to be put forward for consideration after lawmakers return to work on July 11. McHenry has been leading an effort to pass the bill, which would clarify the responsibilities of regulators overseeing crypto products and provide a pathway for crypto companies and exchanges to register with those agencies.
BlackRock has filed an application to launch an exchange-traded fund (ETF) that would allow investors to gain exposure to bitcoin. The iShares Bitcoin Trust would provide a straightforward means of investing in the cryptocurrency, according to the asset management firm’s filing with the US Securities and Exchange Commission. The regulator has so far been reluctant to approve a bitcoin ETF, but the move by BlackRock could prompt others to follow suit.
However, the application is likely to face resistance from the SEC, which is currently in a legal battle with Grayscale over whether its Bitcoin Trust can be converted into an ETF. The SEC has accused Coinbase and Binance of running unregistered securities exchanges, and of commingling customer funds with their own. Coinbase is listed as the bitcoin custodian for the proposed BlackRock ETF, and the two firms have an existing strategic partnership. The only bitcoin futures ETF to have gained significant assets since launching in 2021 is the ProShares Bitcoin Strategy ETF, which has lost more than 40% on a total return basis since its launch.
Article 4: Weekly Spotlight.
This week in the world of cryptocurrency, we have seen a mix of positive and negative news. Bitcoin, the world’s largest cryptocurrency, has continued to struggle to maintain its value, while other altcoins have shown signs of growth. Regulatory concerns have also been a topic of discussion, with some countries tightening their rules on crypto trading, while others have taken a more positive approach. Let’s take a closer look at some of the top stories in cryptocurrency this week.
The price of Tether’s USDT stablecoin deviated from its $1 peg as Bitcoin and other major cryptocurrencies remained in the doldrums. Bitcoin was trading at $25,239, roughly flat over the past 24 hours after spending most of Thursday in negative territory. On Wednesday, BTC tumbled below $26,000 for the first time since mid-March, as markets recoiled from a recommitment to monetary hawkishness from the Federal Reserve. Ether, the second largest crypto in market value, was similarly sluggish at about $1,655, also about flat from Wednesday. Meanwhile, Tether’s USDT stablecoin deviated from its $1 dollar peg early Thursday amid a sell-off on the Uniswap and Curve pools. USDT dropped as low as $0.9968, according to CoinMarketCap data. The token was recently trading at $0.999.
The cryptocurrency market has experienced a significant dip over the past two days, with Bitcoin falling below $35,000 and Ethereum dropping below $2,500. The drop has been attributed to concerns over regulatory scrutiny and the depegging of stablecoin Tether. Tether’s depegging has rattled the markets, given its dominance in the market, which has increased significantly in recent months. Falling liquidity was cited as a big reason for Tether’s depegging, with a massive outflow of liquidity from the Curve 3pool. The cryptocurrency MATIC, the token of the smart contracts platform Polygon, recently plunged more than 5% after being mentioned by the U.S. Securities and Exchange (SEC) in its lawsuits against crypto exchange giants Binance and Coinbase last week. The CoinDesk Market Index, a measure of crypto markets performance, was recently down nearly 3%. The cryptocurrency market’s fade over the past two days continued its decoupling path from U.S. equities, which rose on Thursday as investors drew confidence from encouraging economic indicators.
The US inflation rate fell to its lowest level in more than two years in May, alleviating pressure on the Federal Reserve to continue raising interest rates, according to the Labor Department. The consumer price index rose by just 0.1% for the month, taking the annual rate down to 4% from 4.9% in April, the lowest increase in 12 months. However, excluding food and energy prices, core inflation rose 0.4% for the month and was up 5.3% from a year ago, suggesting consumers are still experiencing price pressure. Energy prices fell 3.6%, but food prices rose 0.2%. The figures were in line with Dow Jones consensus estimates. Consumer prices rose slightly less than expected in May, calming fears of inflation and giving the Federal Reserve room to delay raising interest rates.
With the rise of 0.2%, below the 0.3% expected by analysts, while the core CPI, which excludes food and energy, rose 0.2%, in line with expectations. The CPI had risen 0.4% in April, its largest gain in three years. The 0.6% increase in shelter prices was the biggest contributor to the increase for the all-items, or headline, CPI reading. Housing-related costs make up about one-third of the index’s weighting. Used vehicle prices rose 4.4%, the same as in April, while transportation services were up 0.8%. The tame CPI reading was good news for workers. Average hourly earnings adjusted for inflation rose 0.3% on the month, the Bureau of Labor Statistics said in a separate release. On an annual basis, real earnings are up 0.2% after running negative for much of the inflation surge that began about two years ago. The Fed is expected to announce its decision on interest rates today.
In Conclusion, The US inflation rate fell to its lowest level in more than two years in May, alleviating pressure on the Federal Reserve to continue raising interest rates and BlackRock filling documents with the U.S. Securities and Exchange Commission (SEC) indicating that it may invest in Bitcoin futures and other assets related to cryptocurrencies. The move suggests a growing interest from traditional financial institutions in the digital asset market.
