Wednesday, 12 July 2023

Market Summary

Market Summary 12 July 2023

Bitcoin Price: US$ 30,622.10 (+0.69%)
Ethereum Price: US$ 1,878.30 (-0.11%)  


The market value of tokenised U.S. Treasurys has reached $614 million, as demand for these blockchain-based investment products grows among digital asset investors. With yields in decentralised finance (DeFi) plummeting and traditional finance (TradFi) bond yields rising, investors are shifting their exposure from crypto assets to U.S. Treasurys. This trend aligns with the broader movement of tokenising real-world assets, which could potentially reach a market value of $5 trillion over the next five years. In other news, South Korea is set to require companies that own or issue cryptocurrencies to disclose their holdings in financial statements starting from 2024, aiming to improve accounting transparency. The regulations will cover information about the quantity, characteristics, business models, accounting policies, profits, volume, and market value of crypto holdings. Additionally, brokerage firm Bernstein suggests that MicroStrategy, which holds a substantial amount of bitcoin, may only need to liquidate its holdings in extreme price corrections, particularly around its debt expiry in mid-2025. Higher bitcoin prices can strengthen MicroStrategy’s balance sheet, share price, and debt repayment capabilities, reducing the need to sell its cryptocurrency holdings. Conversely, if bitcoin prices crash and fail to cover debt obligations, the company’s corporate structure could face pressure.

Bitcoin futures liquidations reached their lowest level since April, indicating a decline in interest among futures traders. Around $9 million worth of bitcoin futures were liquidated, contributing to a total of $28 million in crypto-tracked liquidations on Tuesday. This suggests a potential shift in market sentiment. In other news, the European Securities and Markets Authority (ESMA) has released detailed proposals under the Markets in Crypto Assets (MiCA) law, outlining how crypto companies in the EU should be authorised. The proposals cover areas such as user complaints handling and conflict of interest management. Stablecoin issuers have also been urged by the European Banking Authority (EBA) to anticipate and prepare for the upcoming MiCA rules, which will come into effect in June 2024. The EBA wants issuers to adhere to high standards of disclosure and take timely preparatory actions to protect consumers.

Starknet, a layer 2 solution for Ethereum, has launched its “Quantum Leap” upgrade, aiming to increase transaction speed and reduce confirmation times. During testing, transaction per second (TPS) peaked at 90 and consistently reached 37 TPS. Starkware, the team behind Starknet, had anticipated triple-digit TPS following the upgrade. Despite falling short of their target, Starkware CEO Uri Kolodny expressed excitement over the results and invited developers to test the network further. Starknet has additional upgrades planned to enhance scalability and reduce transaction fees later this year. In other news, Senators Cynthia Lummis and Kirsten Gillibrand have reintroduced a crypto oversight bill that would assign regulatory authority over crypto exchanges to the Commodity Futures Trading Commission (CFTC) instead of the Securities and Exchange Commission (SEC). The bill also proposes that stablecoin issuers be regulated as depository institutions. The legislation aims to establish a clear distinction between securities oversight and other regulatory frameworks. Meanwhile, Coinbase’s listing as a “surveillance partner” for spot bitcoin ETFs has contributed to a bullish outlook for the company, with rising options trading volumes and open interest suggesting positive sentiment among traders. However, caution remains regarding short-term price movements.




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