Bitcoin Price: US$ 26,821.28 (-2.13%)
Ethereum Price: US$ 1,800.56 (-1.18%)
Crypto markets experienced a downturn following the release of US jobs data and hawkish comments from the Federal Reserve. Bitcoin and ether dropped towards the lower end of their recent ranges due to concerns over the economic data’s impact on investor sentiment. The initial jobless claims report showed a decrease in claims, which suggests a potential continuation of rate hikes by the Federal Reserve. Dallas Federal Reserve President Lorie Logan stated that the strong labor market contributes to high inflation and further indicated no need for a pause in interest rate hikes. Additionally, the possibility of a US debt deal being reached between Democrats and Republicans prompted speculation that alternative assets like bitcoin and gold could benefit. In contrast, litecoin outperformed bitcoin and ether, rallying 15% in the past week to reach a one-month high. The rise in litecoin’s value was attributed to congestion on the Bitcoin network and the introduction of LTC-20, a fork of Bitcoin’s BRC-20 tokens, which increased activity on the litecoin network. Furthermore, Bitcoin crossed a significant milestone with over 1 million addresses holding at least 1 BTC, leading to discussions about the potential for hyperbitcoinisation as the trend of wholecoiners continues to grow. Adam Back, CEO of Blockstream, suggested that the increasing demand for BTC could push its price out of reach for many.
MicroStrategy, the software firm known for its significant Bitcoin holdings, is exploring the potential of Ordinals, a protocol that allows the creation of NFT-like assets on top of Bitcoin. Michael Saylor, the co-founder and Executive Chairman of MicroStrategy, expressed interest in Ordinals and its implications for application development. Ordinals have gained attention within the Bitcoin community, sparking experimentation and the creation of various BRC-20 tokens. While these tokens have contributed to higher transaction fees on the Bitcoin network, they have also benefited miners. In other news, the Texas legislature has passed House Bill 1666, which mandates crypto exchanges operating in the state to maintain sufficient reserves to fulfill customer obligations. The law also requires exchanges to provide audited or on-chain proof of assets. Additionally, Custodia Bank, a Wyoming-chartered special purpose depository institution, announced plans to launch Bitcoin custody services to cater to investment companies, registered investment advisors, corporate treasurers, and fiduciaries. CEO Caitlin Long emphasised the need to segregate asset custody from management, stating that the world is not yet ready for “hyperbitcoinisation.”
Ripple has introduced the Ripple CBDC Platform, a solution aimed at central banks, governments, and financial institutions to create their own central bank digital currencies (CBDCs). Built on Ripple’s Private Ledger, the platform utilises blockchain technology similar to the XRP Ledger and offers an end-to-end solution for CBDC issuance, enabling instant settlement of domestic and cross-border payments. The platform allows for customisation of the CBDC’s lifecycle, from creation to distribution, redemption, and removal from circulation. Financial institutions can utilise the platform for managing CBDC distribution processes, while end users, both corporate and retail, can securely store and use digital currencies for transactions. In other news, Binance Australia announced the loss of its crypto ramp PayID service, citing a decision made by its third-party payment service provider, affecting PayID deposits and bank transfer withdrawals. The exchange is actively seeking an alternative provider to continue offering Australian dollar (AUD) deposits and withdrawals. Furthermore, the Chair of the Commodity Futures Trading Commission (CFTC), Rostin Behnam, stated that decentralised crypto exchanges, even if based on autonomous code, will be subject to regulation by either the CFTC or the Securities and Exchange Commission (SEC). Behnam emphasised that the focus should be on the products and services offered to U.S. customers and the individuals or entities behind them, and highlighted the CFTC’s authority in addressing fraud and manipulation in cash crypto markets.
Crypto exchange volumes have witnessed a significant decline, reaching their lowest levels since the start of the year, as the market remains stagnant. The dominant position of bitcoin has contributed to this trend, with its market share currently standing at approximately 45%, up from a low of 37.5% earlier this year. Concurrently, volatility has decreased, as indicated by the decline in the Bitcoin Volatility Index. This decline in trading volumes can be attributed to the retreat of major trading firms, Jump and Jane Street, from crypto trading due to regulatory uncertainties in the United States. The reduction in market participants has resulted in compressed options implied volatility and increased hurdles in fiat on/off-ramps, leading to lower volumes and higher volatility across major cryptocurrencies. Nevertheless, this decrease in market participants presents an opportunity for those who remain. In a separate development, FTX’s bankruptcy proceedings involve lawsuits against former CEO Sam Bankman-Fried and other executives, alleging that they knowingly used fraudulent funds from FTX customers to acquire the now-deemed ‘worthless’ stock clearing platform Embed. The lawsuits aim to recover funds for FTX and Alameda’s creditors, alleging that the acquisition was overpriced and took place while Alameda Research was already insolvent.
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