Wednesday, 10 May 2023

Market Summary

Market Summary 10 May 2023

Bitcoin Price: US$ 27,668.79 (-2.68%)
Ethereum Price: US$ 1,847.56 (-1.22%)  


Xapo Bank, based in Gibraltar, will soon allow customers to deposit and withdraw Tether (USDT), the largest stablecoin, without incurring any fees. The move follows the bank’s introduction of a similar service for USD Coin (USDC) in March, which has already seen $48 million in deposits and $4.5 million in withdrawals. Xapo Bank cited strong demand for stablecoin transactions, particularly from its members in emerging markets. Additionally, it was noted that the bank offers a 4.1% annual interest rate on deposits. In a separate development, the price of Bitcoin on Binance.US has been trading at a premium of nearly $650 compared to other exchanges like Coinbase and Binance’s own BTC/USDT pair. This disparity has raised concerns among crypto commentators, with some speculating that market makers are leaving Binance.US due to anticipated regulatory actions.

Litecoin transactions have reached a record high as users seek alternatives to Bitcoin due to the meme coin frenzy and high fees on the Bitcoin network. On May 8, Litecoin executed over 525,000 transactions, nearing Bitcoin’s daily transaction count. This surge is attributed to the congestion on the Bitcoin blockchain caused by the popularity of new Bitcoin-based BRC-20 tokens. As Bitcoin transaction fees hit their highest level since May 2021, users are turning to cheaper alternatives like stablecoins and the Lightning network. Litecoin has experienced increased activity, with a record number of transactions and wallet addresses. In another news, U.S. President Joe Biden criticised “tax loopholes” benefiting wealthy crypto investors while opposing food safety inspections in his proposed budget, which has faced Republican opposition. Crypto Twitter responded with questions about the alleged tax loopholes and the financial struggles of many American crypto users. Biden’s budget plan aims to subject crypto investors to similar rules as investors in stocks or securities to ensure fair taxation.

According to Michael Saylor, co-founder of Microstrategy and a prominent Bitcoin advocate, the recent craze surrounding Bitcoin Ordinals has acted as a catalyst for Bitcoin adoption. Saylor believes that the development of applications and features on the Bitcoin network, such as Ordinals and inscriptions, which have contributed to increased transaction fees, drives interest and adoption. He also identified other factors like bank failures, hyperinflation, regulatory recognition of Bitcoin as a commodity, and large-scale Bitcoin purchases by companies like Microstrategy as catalysts for adoption. In other news, asset management firm Grayscale has filed registration documents with the U.S. Securities and Exchange Commission (SEC) for three new ETFs, namely the Grayscale Ethereum Futures ETF, Grayscale Global Bitcoin Composite ETF, and Grayscale Privacy ETF. This move aims to expand Grayscale’s digital asset offerings, and the creation of the Grayscale Funds Trust will enable independent management of its 1940 Act products. Grayscale has been involved in a dispute with the SEC after its proposal to convert its flagship GBTC fund into a spot Bitcoin ETF was rejected. The company anticipates a final ruling on the matter in the coming months.

Hester Peirce, a commissioner at the U.S. Securities and Exchange Commission (SEC), has suggested that the European Union’s Markets in Crypto Assets (MiCA) regulation could serve as a model for crypto rules in the United States. Speaking at a summit in London, Peirce also mentioned that the UK’s regulatory approach could provide inspiration. MiCA, which was officially passed by the EU last month, aims to establish a “global standard-setter” for crypto regulations and brings clarity to the centralised aspects of the crypto industry. In other news, the percentage of OFAC-compliant Ethereum blocks, referring to blocks that adhere to the Office of Foreign Assets Control’s sanctions guidelines, has dropped to 27% from 80% in November 2022. This decline indicates a decrease in protocol-level censorship by Ethereum validators utilising the MEV Boost mechanism, which allows for strategic transaction reordering within blocks.




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