Friday, 12 May 2023

Market Summary

Market Summary 12 May 2023

Bitcoin Price: US$ 26,968.62 (-2.28%)
Ethereum Price: US$ 1,794.30 (-0.31%)  


Long-term bitcoin holders are taking advantage of the cryptocurrency’s price decline, accumulating more tokens and decoupling it from the rising Nasdaq index. Glassnode’s indicator shows a positive change in net positions held for over six months, with the fastest accumulation rate since October 2021. This suggests that investors view the recent price dip as a temporary pause in a bullish market, leading them to add to their bitcoin holdings. In a separate development, decentralised exchange Uniswap has surpassed centralised exchange Coinbase in trading volume for the fourth consecutive month. Uniswap recorded $37 billion in trading volume in April, while Coinbase saw $34 billion, highlighting the growing popularity of decentralised exchanges on the Ethereum blockchain.

Bitcoin (BTC) has dipped below $27,000 despite the recent banking crisis failing to trigger a price increase as observed in previous weeks during similar situations. Currently trading around $26,950, BTC has experienced a downward trend over the past week, with investors searching for new catalysts to drive the price. Low liquidity remains a concern among investors, leading even minor sell-offs to have a significant impact on price. The recent deposit outflow at PacWest Bancorp did not result in a strong demand for cryptocurrencies. However, Edward Moya of Oanda noted that banking contagion fears are currently low, with some banks reporting rising deposits. While a major macro shock could potentially impact bitcoin’s price, it is currently in an accumulation phase where price dips are quickly absorbed. In other news, a new crypto wallet has been launched on Apple’s App Store, utilising Web2 techniques to eliminate the need for seed phrases or passwords. Private keys are stored in an Amazon Web Services Hardware Security Module (HSM), and authentication is conducted using “magic links” and 2FA, providing enhanced security and convenience for users compared to traditional wallets that rely on recovery phrases.

The Ethereum network experienced a temporary issue with transaction finality, where transactions were not being confirmed for a brief period. The cause of the issue is currently unknown, and Ethereum developers are investigating the situation. However, network data and statements from developers indicate that transaction finality has been restored. Validators on the network were affected by the issue, with a drop in the number of attestations received during specific epochs. The problem was resolved within half an hour. Client diversity, with a variety of software clients available for validators, may have contributed to the issue being limited in scope and duration. In other news, Noah Perlman, the newly appointed chief compliance officer at Binance, faces the challenge of restoring the reputation of the world’s largest crypto exchange with regulators. Binance has faced regulatory issues in various jurisdictions, and Perlman’s mission is to ensure that the exchange operates in a manner that is beyond reproach, leaving behind any legacy issues and improving its standing with authorities.

The U.S. Chamber of Commerce, a prominent business advocacy group, has criticised the Securities and Exchange Commission’s (SEC) approach to digital assets, specifically mentioning ether, Coinbase, Kraken, and the broader digital asset industry. The Chamber has expressed support for Coinbase’s lawsuit against the SEC, which seeks a response to a request for crypto-specific rulemaking that was made last summer. The Chamber argues that the SEC’s lack of direct response to Coinbase’s request is causing significant economic harm to both Coinbase and the broader business community. Additionally, the Chamber criticises the SEC’s enforcement action against Kraken’s staking-as-a-service business, suggesting that it reflects an aggressive enforcement stance that could lead more digital asset companies to halt their offerings in the U.S. In other news, MakerDAO, the decentralised platform behind the DAI stablecoin, has unveiled a roadmap for a major update called Endgame. This update, which aims to enhance efficiency and participation, will utilise AI tools and implement open, scalable processes. The short-term goal of the roadmap is to establish MakerDAO as the most widely-used stablecoin project within three years. The upgrade will ultimately involve the deployment of a new blockchain closely connected to Ethereum, bolstering governance security and introducing advanced features and tokenomics.




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